Advantages Of Single-Family Income Property – Get Rich Education Podcast with David Campbell

Advantages Of Single-Family Income Property – Get Rich Education Podcast with David Campbell and Keith Weinhold

Click HERE to listen to this awesome podcast! 

Direct investment in single family income properties has strong demand from both investors and renters. Single-family home (SFH) income property advantages include: they trade independent of market cap rates, stronger appreciation than apartments, inflation protection, amortization, tax depreciation, lower cost, easier financing, more understandable, no shared walls, divisibility, less tenant turnover, and better locations than apartments. Today’s guest,’s David Campbell helps Keith break down single-family investing advantages. Grab Get Rich Education’s new book at

Want more wealth?  Listen to this week’s show and learn:

01:15 Ken McElroy in 2017: “It’s a terrible time to buy multifamily in most metros.”
06:23 SFHs trade independent of cap rates.
09:57 Appreciation vs. Inflation.
11:03 SFHs are approachable because they’re lower cost and financing can be easier.
14:52 No shared walls: pests, fires, noise.
15:48 Arbitrage.
18:00 Keep a low equity position for asset protection.
20:17 Divisibility.
20:53 The fallacy of “buying cash flow”.
25:08 Prepaying the mortgage is a huge mistake.
27:55 SFH: no or low utility payments.
29:00 Neighborhood quality.
32:00 Cash flow.
33:51 Income tax-free states.
34:57 Tenant psychology in SFHs. It “feels like their own”. Exit strategy.
36:50 has many of the best income property SFHs.
38:25 Ask: “Mr. Manager, what would like to manage?”
40:40 SFHs have less tenant turnover than apartments.
43:10 SFHs is where you typically start.
45:46 “Leaving a trail behind” with 3.5% down payment FHA loans.
48:30 David’s free e-book at

Foreclosures in Texas

Here’s an awesome FAQ article on the foreclosure process in Texas written by one of my favorite attorneys Ian Ghrist:

“Texas allows nonjudicial foreclosure under a power of sale granted by a deed of trust for most real estate loans. Nonjudicial foreclosure is not available in Texas for certain loan types, like home equity loans and property tax loans. When nonjudicial foreclosure is unavailable, the foreclosure must be done through either judicial foreclosure or an Expedited Foreclosure Proceeding under Texas Rule of Civil Procedure 736. In a judicial foreclosure, a lawsuit must be filed, and the plaintiff’s petition in the lawsuit must ask the Court to grant an order for foreclosure. This is the slowest and most cumbersome method of foreclosure because the case will likely not go to trial for several months or years…. ”  CLICK THE LINK BELOW TO IAN’S SITE TO READ THE REST OF THE ARTICLE

keyword: Foreclosures in Texas

Ian ghist texas foreclosure attorney head shotAbout the Author Ian Ghrist:

Ian practices general civil litigation, primarily in the areas of Debtor/Creditor, Real Estate, and Mineral Rights. Ian has handled cases involving deed restrictions, mechanic’s liens, mortgages, lien subrogation, class actions, the Texas Mineral Interest Pooling Act, title disputes, fraud, deceptive trade practices, evictions, foreclosures, lift stay motions and bankruptcy-related matters, post-judgment collections, breach of contract, insurance claims, cases under the Uniform Fraudulent Transfer Act, contract-for-deed litigation, etcetera.

Before law school, Ian spent about four years as a banker for J.P. Morgan Chase where he held a Series 7 license and served as both a stockbroker and a loan officer. During law school, Ian won the 2011 Gershon Moot Court Tournament, served as Executive Editor of the Law Review, and competed interscholastically in Mock Trial. Also during law school, Ian interned for the Honorable D. Michael Lynn, Bankruptcy Judge for the Northern District of Texas, served as Intern to General Counsel at a manufacturer, and served in the Summer Honors Program at the U.S. Securities and Exchange Commission. Ian is an award-winning legal writer, having been inducted along with four out of his 126 classmates into the National Order of Scribes in 2013 in recognition of the exemplary quality of his legal writing. Ian graduated law school in the top four-percent of his class ranked 5th out of 126 students. Ian has published two scholarly articles in legal journals, one on securities and administrative law issues, and another on issues that can arise during a bankruptcy proceeding involving income-producing property. Hyperlinks to these articles can be found below.

> Texas Wesleyan (now A&M) School of Law, Juris Doctorate, 2013,
Magna cum Laude
> Texas Christian University, B.B.A., Double Major in Marketing and Entrepreneurial Management, 2006

Awards & Recognition:
> Inducted into the National Order of the Scribes, 2013
> Medal of Excellence Winner, American Bankruptcy Institute, 2012
> Preeminent Advocate Award, Wesleyan Board of Advocates, 2013
> Pupil, Mahon Inn of Court, 2013

Bar Admissions:
> State Bar of Texas (2013)
> U.S. District Court, Northern District of Texas (2014)
> U.S. District Court, Eastern District of Texas (2014)
> U.S. District Court, Southern District of Texas (2015)

keyword: Foreclosures in Texas

Get Rich Education: Creating Cashflow with Lending

Get Rich Education: Creating Cashflow with Lending

CLICK HERE  to listen to the latest recording “Creating Cashflow with Lending” with professional investor David Campbell and  Keith Weinhold host of the Get Rich Education podcast.  Learn how to create cashflow as a private lender.

07:05 Why now is a good time to move chips from the equity side to the debt side.
10:48 Mortgage Note Investing is also similar to terms like “Hard Money Lending,” or “Private Lending.” Also, discussion of Mortgage vs. Deed Of Trust.
15:45 Buy notes where the borrower has 20-25%+ equity in the property.
23:02 Mortgage Notes provide higher cash flows, less risk, more liquidity, lower transaction costs compared to owning real property.
26:47 Example on a $75,000 mortgage.
34:50 Use your IRA or HELOC to create arbitrage.
36:38 Knowing good from bad, and avoiding fraud.
43:14 Turn your equity into cash flow.

Frank Dodd Qualified Mortgage Rules

If you are interested in the nuts and bolts of creating Frank Dodd compliant mortgages, here’s a link to some dry but informative reading published by the the Consumer Finance Protection Bureau. 
If you just want the benefits of owning Frank Dodd qualified mortgage notes without the hassle of becoming an expert in the consumer finance compliance rules, give us a call and we can surely help you increase your cashflow with less hassle.
Call 866-931-9149 ext 1 – David Campbell – or send us an email 

Increasing Profits While Lowering Risk In A Cyclical Market

Real estate markets are cyclical. 

No one knows when the next downward market will begin, but when it does… you’ll wish you were a “safety first lender”  collecting predictable and secure cashflow rather than a “property owner” holding on to a property that is declining in value.

At Hassle-Free Cashflow Investing, we are preparing to thrive during the upcoming downward market cycle. 

You see… fortunes are made in “down” market cycles, not “up” market cycles like we are currently in.

We’re excited for the upcoming buyer’s market, but the transition from a seller’s market to a buyer’s market requires a lot of patience and can be very painful for those caught unprepared.

Here’s the Hassle-Free Cashflow Investing  solution for thriving during the upcoming market shifts:

(1) Sell real estate equities while it is still a seller’s market.No one knows how much longer today’s seller’s market will continue,but there are plenty of warning signs indicating it may not last much longer.

(2) Convert your “at risk” equity based investments,  into “safety first” investments as a private lender / mortgage investor.

(3) Collect a predictable stream of income from your mortgage investments while waiting for the next buyer’s real estate market.

(4) When the buyer’s market cycle has arrived, sell your mortgage investments and use the cash to buy positively arbitraged investment real estate.

(5) There’s a season for buying, a season for selling,  and a season for just holding what you have.

A huge part of being a “Hassle-Free Cashflow Investor”is lowering your risk by  sitting out of the equity market during the worrisome transitional times.

While no one know for sure what lies ahead in our economy,however it’s our belief at Hassle-Free Cashflow Investing that the current rewards of direct real estate investment do not outweigh the risks. 
Don’t get me wrong,  there are people who will make money buying real estate in today’s economy.  I just think they are taking a bigger risk than they need to.  I love owning real estate and while there are LOTS of benefits of real estate ownership there are also lots of risks.

When the investment risks outweigh the upside potential, you need a different investment strategy.  This is exactly why in 2015 my company changed its focus from helping clients acquire real estate investments to  helping clients acquire mortgage investments.

Here is the “risk versus reward” concept in simple terms: 

If you could flip a coin and triple your money each time it came up heads and lose 50% of your money each time it came up tails, you’d be wise to make that bet as often as possible. If you could earn 10% profit each time the coin toss came up heads and lose 50% of your money each time it came up tails, you’d be foolish to ever make that bet. In both of these examples the risk is the same (lose 50%), but the rewards are drastically different (10% profit versus 300% profit).

In today’s real estate and stock market, the risk of loss is not significantly more than it was a few years ago, however the potential for gain has dropped astronomically.This risk-reward analysis has pushed me out of acquiring direct ownership of real estate and into debt based investments.  For those who are relatively new to my newsletter, you’ll know that I’m not a fan of the stock market.  While I still happily own a lot of investment real estate as a tax shelter and hedge against inflation, the majority of my personal investing has shifted to mortgage investments rather than real estate.

A debt based investment like mortgage investing is a guarantee of a specific outcome.  You will either: (A) get the interest rate stated on the note or (B) you will get to foreclose on the real estate collateral for a fraction of what the market value of the property was as on the date you made the original investment.

If your investment horizon is long enough you’ll probably do great as a property owner even if you buy at the top of our current market cycle.  After all, while we are currently in a seller’s market of real estate, we are in a buyer’s market for long term debt. Real estate prices are at all time highs, while mortgage interest rates remain at all time lows. I would rather “over pay” for a property once and “under pay” for my interest rate every year for 30 years than vice versa. It’s very possible that today’s interest rates are a once in a generation phenomena, so if you are young enough it could very well make more sense to load up on as much positively arbitraged real estate as possible rather than investing in the security of mortgage investments.  However, a lower risk / potentially higher reward formula (especially for older investors who have less time to benefit from the asset of extremely low long term fixed interest rates) is to acquire positively arbitraged mortgage paper and wait for the reward side of real estate investing to increase.

Don’t you wish you could go back to the buyer’s market of 2011-2013 and double down on direct ownership of real estate? If you’ve been investing long enough, don’t you wish you would have sold everything in 2007 and just sat out of the market for a few years?

You might consider stripping the ‘at risk’ equity out of your current rental properties (through sale or refinance) and then place that equity into a safety-first senior mortgage investment until the next buyer’s market comes around.  Done correctly this will increase your cashflow and profitability while simultaneously reducing your macro investment risk.  It will also keep you in a relatively liquid position for when the next buying opportunity arrives.  Mortgage investments are much more liquid than real estate investments.  Any time I can increase yield while simultaneously lowering risk,I definitely want to pay attention to that opportunity.

Our company sells mortgage investment opportunities that could provide you with the benefits of increasing your yield while lowering your risk.  To access current investment opportunities, send an email to  or use the link at the bottom of this blog post to schedule a time to talk about your personal investing situation.

Here are links to a few of my blog articles where I discuss these risk reward concepts in more detail:

How to Predict Real Estate Prices

Borrowing To Invest Can Increase Cashflow and Lower Risk


Here are a few podcasts and webinars where I discuss the nuts and bolts of mortgage investing:


If this blog post was helpful to you, please consider sharing it on social media and/or forwarding a link to your friends.

Best regards,

David Campbell

Real Estate Investing Strategist

Office: (866) 931-9149 Ext. 1

Cell: (707) 373-9966

You may schedule a no cost investment strategy consultation with David Campbell

using this link to his online calendar:

To become wealthy, focus on …

Focusing on money will get in your way of building wealth. To become wealthy, focus on giving up benefits you don’t want for benefits you do want.

Different people need different benefits which is why there is a transfer of assets.

Stay focused on giving and receiving benefits.

To your success,

– David Campbell

(p.s. if this post seemed overly simple, read it again and again till you can think of several real world examples of giving and receiving benefits that are not related to money)

How Brexit May (or May NOT) Affect Your US Real Estate Portfolio

How Brexit May (or May NOT) Affect Your US Real Estate Portfolio

this article was written by Nick Eddy – real estate investor, practicing attorney, and guest blogger at Hassle-Free Cashflow Investing.

On June 23rd the United Kingdom voted to leave the European Union. The Brexit vote came as a surprise to most considering recent polls showed voters preferred to remain part of the EU. Regardless, by the time the polls had closed it became obvious the UK would sever its ties with the EU. The Brexit vote was quickly followed up with British Prime Minister David Cameron, a staunch supporter of remaining within the EU, announcing his resignation.

Then, the world financial markets took a drastic tumble. Right away, pundits and gurus began to speculate on how Brexit would affect the US real estate market. The majority of these pundits seemed to speculate that for US real estate investors, Brexit would be great. Generalized widespread statements were made that “US real estate demand and prices will increase.” However, with this article we’re going to point out that the pundits’ predictions may not be accurate for your properties. Not all US real estate investors will receive this Brexit windfall. Let’s take a closer look at how the Brexit vote might actually affect your portfolio.

  1. Lower Mortgage Rates

With the surprising Brexit vote people got nervous. Suddenly, the world seemed a little less stable. This type of fear and uncertainty tends to play out in the economy, often resulting in lower interest rates. US real estate investors may really benefit here. Interest rates were already historically low, but the new turmoil in Europe will likely hold down these low rates even longer. Given the Fed’s recent tendency to wait and see, it’s seems likely rates will be kept low for a while as they see how Brexit plays out in the world economy.

So what does this mean for your US real estate portfolio? First, look at your properties that currently have good equity and consider pulling the cash out with a refinance. You should be able to lock in a nice low rate. I just had an offer accepted on two different duplexes and the interest rate I received on those properties was a mere 3.5%, which is terrific for non-owner occupied property.

With lower interest rates we may also see an increase in property values. When prospective buyers do the math on how much house they can afford every month, they’ll see they can afford to pay a higher price for the home because of historically low interest rates. This will likely increase property values in a lot of markets throughout the US. However, be careful not to rely on this Brexit appreciation—it may never come to your market. (*** editorial comment by David Campbell  … “In my research, income producing commercial real estate values and interest rates are directly correlated, but historical data has shown us – almost counterintuitively –  that there is no correlation between the price of owner occupied residential real estate and mortgage interest rates .”)

  1. Foreign Real Estate Investors Will Flock to (SOME) US Markets

The majority of pundits told us that US real estate prices would increase because foreign investors who once invested heavily in the UK housing market will start to put their money in the US housing market. Since all real estate is local, it’s a little bit more complicated than that.

For years, London and other major UK cities were a go to place for foreign investors—particularly for Chinese and Middle Eastern investors. And there is no doubt Brexit has had, and will continue to have, a negative effect on UK real estate values—but, that does not mean these foreign investors will start buying property in your market. Typically, these foreign investors buy high end luxury properties in top markets. They buy vacation homes on the beach and plush condos in the heart of major cities. So it is likely demand will go up as foreign investors look to buy property in the US, but it’s likely to be in markets like Manhattan, San Francisco, and Miami. I own rental properties in the rural Midwest. They are great properties that generate solid cash flow, but I don’t expect the value of those properties to increase due to foreign investor interest. These properties are over an hour away from any major airport. I just cannot imagine a wealthy Chinese investor coming into my small rural town and purchasing a bunch of real estate.

As more high end properties in large markets are gobbled up by new foreign investors, we may see demand trickle down to other segments of the market. New foreign investors will drive up prices in larger markets, which will send US investors to middle and possibly low market properties. This could end up eventually causing values to increase in smaller markets.

  1. Frustrated Wall Street Investors will Look to Real Estate

In the wake of the Brexit vote the Dow lost over 270 points and the S&P 500 dropped over 1.5%. Many of the gains investors made in the stock market over 2016 were reversed in one week, and many indexes are now below their 2015 closing values. Frustrated and burned investors focused on the stock market will start to look for their gains elsewhere.

With this potentially new influx of US real estate investors it’s important to be careful where you purchase your properties. Beware of markets where yield is being compressed by foreign investors. Instead, stay in markets that are out of the spotlight, but have the right metrics where the numbers still work well. Also, consider selling your high priced properties in high end markets and exchange them for cash flow properties off the Brexit price increase radar.


            With the Brexit vote the pundits almost unanimously claimed that US real estate values would increase. We must keep in mind that all real estate is local. There is no single US real estate market. While Brexit may increase the value of a New York based investor’s portfolio, an Indianapolis based investor may not experience that same gain. We must continue to do our own due diligence on every deal.

All the best,

Nick Eddy – Esq.

How To Predict Real Estate Prices – Get Rich Education Podcast

Get Rich Education: How To Predict Real Estate Prices

How to achieve financial freedom

CLICK HERE  to listen to the latest recording “How to Predict Real Estate Prices” with professional investor David Campbell and  Keith Weinhold host of the Get Rich Education podcast.

Get Rich Education is a weekly podcast with an abundance mentality to create wealth through real estate investing for an outcome of lifestyle improvement. Robert Kiyosaki has appeared as a guest on the show. His Rich Dad Advisors and Hassle-Free Cashflow Investing’s David Campbell are regular contributors.

The show appears on iHeart Radio, iTunes, Android, and dozens of platforms.

Want to learn How To Predict Real Estate Prices ? Well, CLICK HERE  to listen in.

How to Predict Real Estate Prices – PREI Podcast

passive real estate investing podcast_coverHow to Predict Real Estate Prices

CLICK HERE to Listen in to the Passive Real Estate Investing Podcast episode 43 with host Marco Santarelli and featured guest David Campbell – founder of Hassle-Free Cashflow Investing – as they talk about how to predict real estate prices! If you can see where a market has been, and where it may be headed, you can lower your risk and improve your investing results.   Learn to predict property values, price trends, market drivers, inflation, currency and other important factors that savvy investors should be aware of.

Buying Notes Can Be a Great Way to Invest in Real Estate

Buying Notes Can Be a Great Way to Invest in Real Estate

invest florida podcast eric odum david campbellCLICK HERE TO LISTEN TO: Episode 81 of the Invest Florida Podcast with host Eric Odum and featured guest David Campbell – founder of Hassle-Free Cashflow Investing.   David and Eric talk about investing in mortgage notes and making hassle-free cashflow as a private lender.


Are you familiar with this loop hole for avoiding the early withdrawal penalty from your IRA?

Are you familiar with this loop hole for avoiding the early withdrawal penalty from your IRA?

The following is an excerpt from

An additional 10% tax applies to early distributions (before the participant reaches age 59½) from a retirement plan or IRA under Code §72(t)(1).

Section 72(t)(2) lists exceptions to this tax, including distributions received in substantially equal periodic payments.

Is there an exception to the tax for early distributions made in substantially equal periodic payments?

Yes. If distributions are made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary, the §72(t) tax does not apply. If these distributions are from a qualified plan, not an IRA, you must separate from service with the employer maintaining the plan before the payments begin for this exception to apply. If the series of substantially equal periodic payments is subsequently modified (other than by reason of death or disability) within 5 years of the date of the first payment, or, if later, age 59½, the exception to the 10% tax does not apply. In that case, your tax for the modification year is increased by the amount that would have been imposed (but for the exception), plus interest for the deferral period.

(The above is a quote from the IRS website and should not be considered tax advice)

How To Achieve Financial Freedom – Podcast Episode

How To Achieve Financial Freedom

How to achieve financial freedomListen to Get Rich Education Podcast episode 79 with host Keith Wienhold and special guest David Campbell founder of as they talk about How To Achieve Financial Freedom.


Financial freedom through real estate and mortgage investing recently enabled me to move from urban California to follow my dreams of living on an Oregon farm.


I feel fortunate to have recorded my third podcast episode as a featured guest on the Get Rich Education Podcast hosted by Keith Weinhold.  Check out this awesome podcast recording where Keith and I discuss How To Achieve Financial Freedom in ways you might not have considered before.


02:50 Financial freedom via real estate enabled David to move from urban California to an Oregon farm. 
06:35 Once you know your “compelling why” it will embolden you. You act. 
09:39 Quit trading your time for money. 
12:53 Your Personal Investment Cycle versus the Market Cycle. 
14:53 The essential investor resources of cash, cash flow, equity, credit. 
17:17 Investing for profits vs. investing for wages. 
22:30 What to do when your personal investment desires don’t match with market cycles? Buy high? Sell low? No. 
25:02 Keith and David don’t invest much in the stock market; but here’s why they watch it. 
28:25 Low interest rates continue to be a great opportunity. Here’s why. 
36:10 Cap rate minus interest rate equals your profit. 
41:06 A cash dollar is different than an equity dollar.

To your success!

David Campbell

Real Estate Investing Strategist
Founder of Hassle-Free Cashflow Investing
“There are few investments as secure, as lucrative, and as Hassle-Free as owning a well-secured, income producing real estate note.” 
– professional investor David Campbell 
how to achieve financial freedom

Advice for an aspiring real estate developer

I get LOTS of emails.  Many of them are from new and experienced investors looking for advice.  Here’s an email thread between myself and a new investor, Ian, that you might find valuable.  If you have advice for an aspiring real estate developer, please leave it in the comments.  Ian is surely reading this post and is eager for your advice as well.

IAN WRITES – “Hello David, my name is Ian. I have a passion for real estate development and would like to get into the business and any help you can provide would be greatly appreciated.  Do you have any advice for an aspiring real estate developer?  Thanks in advance and look forward to hearing from you soon.”

DAVID WRITES “Great to meet you.  There is a ton of advice for an aspiring real estate developer on my website for free:  Real estate development is a very complex business.  How robust is your current investing experience / portfolio?”

IAN – “I have zero experience in the industry and I am aware that I need to start off very small before I can get into actually developing my own properties, but I don’t have any contacts on the development side of things. I know a couple of people who own small duplexes and apartment buildings and a couple of residential agents, but no one in development. I’m just eager to learn and get my feet wet.”

DAVID – “Here’s some advice for an aspiring real estate developer to be considered asa point of departure on your path to becoming a real estate developer:

1) buy at least four SFR rental houses that are simple “buy and hold” properties
2) take classes in accounting, taxation, real estate brokerage, real estate law
3) get a job selling anything that has a good sales training program attached to it.  real estate development requires A LOT of sales skills.
4) get a job in the real estate industry as an agent or loan officer or new home sales or leasing agent (or all of the above)
5) go to lots of real estate club meetings (don’t spend a lot of money doing this) and make friends. Look at and your local REIA
6) buy lunch for as many real estate mentors as you can find.  pick their brain. be humble. ask questions. write down the answers.
7) find a developer who will let you partner with them on as many deals as you can until you’re ready to go out on your own
8) look for ways to add value to other people and add value to the market place
9) build a rolodex of capital partners that believe in you.  real estate development is very capital intensive and will always require other people’s money.
10) there are good classes taught by the Urban Land Institute –  and the CCIM institute
11) if you are into building housing go to homebuilding conferences like or if you are into commercial real estate development go to the International Council of Shopping Centers at
To your success!! – David Campbell, founder of”
Please leave your advice for Ian below.  He would surely appreciate whatever ideas you have to offer.

Hassle-Free Cashflow Investing Named Top Real Estate Blog

My real estate blog was named #30 on the top real estate blogs to read in 2016. It’s a nice honor. There are some excellent names on this list of 85 of the top blogs in the real estate industry.

top real estate blogs Best-Real-Estate-Blogs-2016

David Campbell featured guest on the “The Land Geek Podcast” with Mark Podolsky

David Campbell from is a featured guest in this episode of the Best Passive Income Model Podcast with host Mark Podolsky.

CLICK HERE to listen in as Mark and David talk about real estate investing strategies.

If you’d like to help out the Land Geek Community, please rate, review, and subscribe to the podcast on iTunes.

David Campbell - Mark PodolskyTip of the week:

David: I’ve got a couple resources on my website at for free you can download a very expensive white paper called Hassle free Cashflow Lending that’s on my website at I’ve also got three awesome webinars each of them are an hour long specifically Nuts and bolts of private lending, with the Tax investing strategies for private lenders and How you use self-directed IRA to be a private lender and all those are free videos on my site at


The Best Passive Income Model Podcast With Mark Podolsky, AKA The Land Geek

Mark Podolsky Chats with David Campbell,


Mark: Hey, it’s Mark Podolsky The LandGeek with your favorite nichey real estate website and today guest probably forgot more about real estate than I’ll ever know, this guy is so big, the founder of Hassle free cashflow investing. David Campbell started investing in real estate part time while he was working as a full time high school band director with zero net worth and within six years and before the age of 30 David had become a financially independent millionaire through the vehicle of part time real estate investing. He has done over a billion dollars bid, a billion dollars of transactions and advisory experience and he’s very well know within real estate circles. I’ll just put on my anchor voice. David Campbell you’re a big deal, how are you?

David Campbell: Hey Mark I’m so happy to be here with you and your audience.

Mark Podolsky: I’m thrilled to be here. So let’s go back to the high school band director days and how did you get the bug and the gumption and did like okay I’m going to be big in real estate?

David Campbell: When I was first teaching I was working part-time in an income tax office and my job was to put the stuff in the computer and then let the CPA

process it and at the end I would staple the return together and hand to the guy and say you owe so much in taxes. I did a tax return for my middle school science teacher came in, “I’m like you owe 32% of your income in taxes.” I’m like that’s not very good and I could see in their pay stub he didn’t make very much money.

And then this guy came in and it took me a whole week to put his tax return into the computer and he owned business, shopping centers and apartments and grocery stores and at the end I put it was like a rim of paper his whole tax return and I gave to the guy and said, “Your tax bill is zero.” Wait something is wrong here. I know that you make hundreds of thousands of dollars this year and your tax is okay, zero and I asked my boss. I’m like, “Eleanor how is that possible that this guy made so much money?” And she said, “Well someday you’ll figure out you know depreciation and the tax shelter for business and the best advice I can give you is when you get your first grown up paycheck go buy a two bedroom something and go rent out the other bedroom.” So I did.

I was teaching high school then, I got my very first paycheck and I went and I applied for a loan and they said you got a credit score and a job so here you go 100% financing to buy a two bedroomed, two bath condo. I think I bought it for 140 grand in Southern California in 1999 and I rented out that bedroom and it covered half my mortgage payment. I thought that’s cool and then I did a little bit of work on it and at the end of the year I looked into my check in account and it said zero. You have $0 in your checking account and I’m like oh that’s not a surprise, I’m like I’m a high school band teacher. I was making like $30,000 a year teaching a high school band in 1999 and then I looked at my balance sheet and I had my $140,000 condo had gone up $170,000. I had $30,000 of equity that I didn’t have before.

That was my entire paycheck earned as a schoolteacher now is equity on my balance sheet and then the very next year, the same thing happened. The $140,000 condo was worth $200,000, I was getting some great tax shelter from the depreciation on half my condo and writing off half the utilities and that turned out to be a good deal. I suddenly after two years of teaching high school then I had 60 grand and I sold that condo.

I thought if it worked small it will work and I bought a five bedroom house. The biggest I can afford and I rented out four bedrooms and there I was now I had no housing payment. Those four roommates paid the entire PITI on my mortgage, plus the utilities, plus the cleaning, and I was living there free.

Mark: Yeah, but David you got four roommates.

David Campbell: Yeah, when you are young.
Mark Podolsky: Yeah you’re right. That’s right I keep forgetting you’re not even 30 yet, okay.

David Campbell: Yeah. So here I am young, four roommates it’s not optimal, but now I’m bankable. Because I got to my bank and I say look I have no housing payment, check out my DTI. Give me a loan to go buy rental property and I was able to do a cash-out, refinance and pull some money out of my primary residence and I was bankable. I went out and bought a rental and that rental went up in value and I took the money out of that and I bought three more rentals and the rentals all went up in value. I sold those and I bought eight more and those all went up in value. Then I bought an apartment building and I was out of the rat race, bada bing it’s pretty simple.

Mark Podolsky: Wow. Okay so you’ve gone the whole gambit as far as real estate investment. I mean you’ve done single-family homes, you’ve done apartments, you’ve done retail, you’ve done offices, you’ve done medical, you’ve done condo conversion, net lease properties, triple net lease, I love triple net by the way, syndications land development which we’ll talk about, production homebuilding, private lending and a winery. If you could go back in time are there any of those pieces that you’d be like yeah I could probably do without the condo conversion or you know the production homebuilding. I don’t know or is there’s any that you’d have double down on? Like you know what apartments are great or retail is great.

David Campbell: That’s a good question. So I’m very much a market cycle investor. So when I look at my real estate resume it looks like I’ve got ADD and I just don’t know what to invest in but I very much look at what the opportunity is in the market, will find a way to add value, will look to see where there is a gap in the marketplace to add value and then there’s a little bit of do the deal that’s on your plate. When someone brings you a deal and it’s a good deal. You know, when I was early in my career I didn’t have a very clear investment philosophy and so it was do every deal that makes sense.

Mark Podolsky: Right but there’s a big education piece to this. How are you learning land development, syndications and triple net lease properties?

David Campbell: That is a great question and you find people who are experts in the field and then you partner with them and you put together groups of people and you sit back and you be the quarterback of your team so you don’t have to know. Like when they interviewed Henry Ford and said, “Mr. Ford how does a carburetor work?” And he says, “I have no idea but I know how to use a telephone and I just call someone who works for me and they tell me how a carburetor works. In fact they don’t even tell me they just tell the guy in the production line how to make a carburetor and then I just sit back and run the whole thing.” That’s what I view my role as an entrepreneur is to pull the puppet strings. Find the opportunities, analyze them, pull the puppet strings and let your team do what they’re good at.

Mark Podolsky: Yeah. I love the model and the beauty of this is you’re doing this all part-time. You’re still a high school teacher.

David Campbell: No no no. I retired from teaching 11 years ago.

Mark Podolsky: No, I know but like then…

David Campbell: Oh at that time.

Mark Podolsky: …you were doing it. When you first started, you were doing this all part-time you don’t leave until 2005.

David Campbell: That’s correct. Yeah, that’s correct, so you’re right. In year one when I was teaching high school band I was very fortunate that I had summers. So you get the couple of months of summer vacation and when I was teaching I’d spend my lunch hour, and before and after school time really reading and immersing myself in real estate. So there I was in my office and school was done at 3 o’clock and then band practice didn’t start till seven so I got four hours and I didn’t want to go home. It was a long way to go for just a short break to go around and then come back. So I would sit in my office almost every day after school and just read and study real estate and got my license and anyway it’s been a great great ride.

But your question earlier about what would you again and what would I not do again and the crux of my current investing style is hassle free, cashflow, investing it’s got to be all three. It’s got to be cash flow, it’s got to be hassle free and it has to be an investment and to me an investment is not a job. So if I’m working it, if I have to put in my time, it might be lucrative, it might be a very lucrative real estate business, but it’s not an investment. An investment is something that I can put in money and my money makes money and cashflow is obvious. It’s got put more money in my pocket every month, or every quarter, or every year, whatever that time period is it puts money in my pocket rather than take money out and then hassle free.

There’s a whole realm of things that go into making hassle free investment. So when you’re looking at a lot of those things on my bio like land development, production homebuilding and condo conversion those are not

hassle free and they’re not cashflow. But it was certainly a great way for me to make a bunch of equity in a real estate related business and then move that equity over into hassle free investments like triple net lease properties and mortgage investment.

Mark Podolsky: Yeah I mean absolute. I remember having a talk with a big apartment investor in California and he said Mark if I could do it all over again I wouldn’t have gone through the brain damage of apartment investing. I would have only focused on triple net leases on like Jack-in-the-Box’s and Taco Bell’s and these big single tenant leases with these franchises that rarely go out and I thought was really interesting. He says at the end of the day its 15% all day long. You know the rents go up every about 15 years or something and they never leave. Is that your experience with triple net?

David Campbell: Yeah absolutely. So when I’m buying a triple net property I’ve got a couple of rules. The first is I want the cap rate to be higher than the interest rate. So if I can borrow money at five and I can buy a seven cap property then I’ve got a 2% arbitrage spread, positive arbitrage and that makes my yield really work. If you go out and borrow money at 5% and you go buy a 30 year triple net lease McDonald’s at the corner of Main and Main in San Francisco it’s going to be two maybe three cap and you’re upside down.

Mark Podolsky: Yeah exactly and that’s the problem with getting triple net properties is that the cap rates are so low.

David Campbell: Yeah. So I winded up buying triple net lease properties where I’ve got a very strong national credit tenant, but I might be in a secondary market. So I got to go to Georgia or South Dakota or somewhere where you know Wall Street doesn’t want to go buy that net lease to asset for some giant hedge fund. It’s more of a mom-and-pop style investment which gets you those higher yields but still great locations, great land and great tenants.

Mark Podolsky: Yeah okay but let’s get back to the original question. If you could do it all over again where do you think you’d put most of your focus? It’s because I love the model hassle free, cash flow and an investment because my model eventually becomes an investment but it’s really… It starts as a land business and until you create your team, your systems and your automation you don’t get out of it for a while.

David Campbell: That’s right.
Mark Podolsky: So I like the start out with the investment part.

David Campbell: So there are certain things that I’d definitely do again and there are certain things that I would recommend to a new investor and those aren’t necessarily the same thing. Things that have worked very well for me that I would you again and again I really like production homebuilding, particularly during the last market crash. We were very aggressive about buying finished lots. We bought a lot of lots that were below replacement cost. For example, maybe we paid $10,000 to buy a lot where if the dirt were free it would still cost you $25,000 to put the roads and utilities and all of the improvements to make that a buildable lot.

Mark Podolsky: Oh yeah. I mean we had tonnes of that out here, tonnes of it.

David Campbell: Really?
Mark Podolsky: Yeah.

David Campbell: So that was a no-brainer for me is to go heavy into developed finished lot inventory in a down market and then the homebuilding company is just a means to an end to realizing that equity. Because if you go buy that distressed lot you could just sit on it and hope and pray and feed the alligator of mowing, taxes, insurance and maybe your mortgage payment or you could build your way out of that. You bought the land cheap, go put a house on it and if it sells that’s awesome you make your money, if it doesn’t sell you just built yourself a rental property at wholesale rather than retail.

Mark Podolsky: Right. Yeah I love it. So is that what you’d have done from the very beginning?

David Campbell: No.
Mark Podolsky: If you can go back or how would you have started?

David Campbell: I think if I were to start I would do it at the same. I’d go buy a condo and get a roommate and then leverage that into more and more single family homes. I think I call it the low hanging fruit, when it’s a buyers’ market you buy, when it’s sellers’ market you sell and here we are in 2015 it is a hard time to buy properties in this market so I go on the habit that makes sense. So I think it’s a good time to sell. In your stock market when stocks are high you sell stocks and you buy bonds and then when the stock market gets low you sell bonds and you buy real estate. So right now in this market cycle I’m selling real estate and buying mortgage notes. I don’t want to be holding real property; I want to be holding paper. So if there’s a market correction then I’m insulated from that and then in the mean time I can collect the income on my mortgage paper just wait for the next market cycle to correct.

That makes a lot of sense for me because I have a lot of resources to play with and a lot of education to work with and a big team to work with. So that makes sense for me but for someone just starting out and investing I would say go find some house that you could buy at a six or seven cap rate, you put 30 or fixed debt on it at 5% get as much leverage on that as you can and just sit and wait. It’s not a great vehicle for producing atomic cash flow, but it’ll create equity for you. Right you just sit and let your tenant pay that mortgage down for you and let that property appreciates due to inflation and appreciation. It’s a slow road to pass to 12 but you got to do something to get your equity and then once you get your equity, convert that equity into cash flow either through more cash flow investments like triple net, commercial property or through mortgage notes.

Mark Podolsky: Yeah I know. I mean I’m a big believer like let’s start slow and then build your wealth gradually right and then you won’t end up making a huge mistake I don’t think if you do it that way. Where if you were starting out let’s say in 2006 and things seem so easy, it’s very easy to kind of crash and burn I think. You know, not having any perspectives as far as what a real estate cycle really looks like and the typical real estate cycle is 10 years, correct?

David Campbell: Yeah.
Mark Podolsky: So where do you think we are in our cycle.

David Campbell: It’s hard say from like a national perspective because real estate is local, local, local. So like the markets that I really keep my eye on are the Bay Area. San Francisco, Bay Area because that’s where I live then and then I keep my eye on the Dallas-Fort Worth market because that’s where the majority of my investing is. And I think here in California were in a bubble and I think the stock market is in a bubble and I think real estate market is in a bubble and I see the next move is either going to be kind of just sideways or slightly up and then 10 to 25% down. That’s my perspective, and I’ve got a great blog article that went a little bit viral on how to predict real estate prices. So on the website at there’s a great article. Just Google how to predict real estate prices and you’ll find a great blog article that you can apply your local market and say hey me what’s happening in my local market. Dallas-Fort Worth I think has a lot of very strong fundamentals. I still think that market is undervalued so it’s still very bullish on Dallas-Fort Worth. It’s affordable, jobs are abundant, jobs are being created at a record pace, people are moving in faster than people are building new housing and the ratio between incomes and housing prices is affordable. So for example in San Francisco just for a teaching point, and these numbers are not accurate but just for an illustrative point.

Let’s say the median home prices in San Francisco are $1,000,000 and the medium income is $100,000 that’s 10 times. You’re using 10 years of salary to buy the median home or median income times 10 equals the median home price. In Dallas and a lot areas where we’re investing the median [00:18:00] [Indiscernible] which is less obviously in San Francisco but the median home price is only 150 which is three years of median income divided by median home price which is very affordable. So that’s where I see areas like San Francisco have to come down because there’s no greater fool, there’s no one left to come in the door to push the prices up.

Mark Podolsky: Right but San Francisco is kind of an interesting market with all that Silicon Valley money you know.

David Campbell: It is and a lot of the people who are always pushing the prices up are not doing it with wages, they’re doing it with stock options that they received at their tech companies. So the stock market has done really well, that stock market equity has found its way into the housing market, but if the stock market goes down those buyers don’t have any equity to buy real estate with or if the stock market just stays sideways everyone who bought is going to buy and there’s no one new coming in the door to have that instant equity or the pop of equity that they earned in the stock market.

Mark Podolsky: Right. So David, I’ve never heard a note buyer or a note investor or note expert on the podcast you will be the first. So can you kind of just give us at a high level what note investing is, why it’s hassle free and what the benefits are?

David Campbell: That is a great question. When I’m looking at mortgage note investing I want it to be profitable if I’m repaid which means I’m looking for a strong interest rate or a discount on that mortgage to give me the yoke that I’m looking for and I want to be profitable if I’m not repaid. If I can answer those two fundamental questions will I be profitable because when you’re buying a note there’s only two outcomes you’re going to be paid or you won’t.

If I’m buying an unsecured note, like a credit card note or medical note receivables or something like that, if they pay you’re happy, if they don’t pay you well you just say please pay me and they’ll say no. You say well please, please, please pay and they’ll say no again and there’s nothing you can do about it and you’re right it’s not a good outcome. So part of investing in mortgage paper is the collateral, that’s what makes the whole thing work. If the borrower doesn’t pay you, you get the property for pennies on the dollar, which makes it worth the time and effort of making a loan and foreclosing on the asset.

Mark Podolsky: Right. So it’s really underwriting game at the end of the day. Can you get extra yield and is there enough equity in that property so worst case if I got to go through the pain of foreclosure I’ve got an asset at unbelievable discount.

David Campbell: That’s right and you look at most mortgage lending the vast majority of mortgage lending in the country is either purchased by Fannie Mae Fred [00:20:58] [Indiscernible] government is manipulating interest rates there to creating low yields or it’s securitized and sold on Wall Street and investors are so starved for yield and bond rates are so low that they push the yields incredibly low. So the vast majority of paper is going be Fannie Mae, Freddie Mac or securitized on Wall Street and they buy very sanitized things. They’ve got a very clear box of what fits in those niches. If it doesn’t fit in that niche, let me just take a step back. If it does fit in that niche your interest rate is incredibly low.

Mark Podolsky: Right so there’s no deal there for you.

David Campbell: That’s right. If it’s an A-plus borrower, clean collateral and they fit in that Fannie Mae, Freddie Mac box I can’t compete there because Wells Fargo is going to do the loan at 4% and I need to get a higher yield than 4%. So if it doesn’t fit in that box there is no lender and so then the private investor gets to step into that market and state Mr. Borrower I am the only lender you have. So when I look for opportunities in the marketplace, I’m looking in places where I can add value and not compete with the bank but to provide this service that is absent from the marketplace. So I’m not competing with Fannie Mae, Freddie Mac or Wall Street, I’m the only lender that will do that loan so I get to dictate the interest rate and the borrower can either accept that rate or not.

Mark Podolsky: Yeah. In order to do that many deals you needed to move the needle?

David Campbell: That’s right. One of the things about making a hassle free investment is duplicate ability, being able to do the same thing over and over again. In my business I look at say Starbucks and McDonald’s and every single Starbucks and every single McDonald’s has the same systems and the same products. If a big mac in Los Angeles is tasting the same as a big mac in New York City as it will in Dallas and that’s what I want for my business is systems where I can do the same thing over and over again. Having been that kind of ADD market cycle investor doing [00:23:46] [Indiscernible]. I realize if I can make something duplicate able and put a system then I know the types of deals that I can and I can go to the market place and create them.

Mark Podolsky: Yeah I love the model, I love it. So how did you get into that?

David Campbell: I was running my home building company in 2009 is when we started building houses in Dallas, Texas. It was great time to start a home building company because land was cheap, everybody was looking for work and so labor was cheap and materials were cheap because no one else was building. So it was a great time to build except for there was no buyers and there was no money. There’s only a small problem so we specifically said let’s go build now and build rental products because everyone has to have a place to leave.

In 2009 when everyone is being foreclosed upon they still needed a place to live so they were just moving out of owner-occupied housing shifting to rental housing. So we created a model to fit that time in the marketplace and then we went to banks and said, “Mr. Banker look I’ve never built a home in my life, but I’m an experienced investor developer who’s only had kinds of commercial real estate development that I’m doing. I’d like to build a single family home and put it out for rent would you give me a loan?” And they said “Don’t let door hit you on your way out. Get out of here there’s no way we’re going to lend to: a) home building that’s a nasty word and two you’re like a new developer forget it and three you want to go rental product no way.”

Mark Podolsky: Right.

David Campbell: So most people would just stop and give up and I said no this is going to work. So I called up hard money lender that I knew from Alaska and I said Mr. Hard Money lender in Alaska I know that you got a very fragile economy there in Alaska and all of your assets are single economy focused. How would you like the opportunity to diversify into Dallas, which is one of the most safe economies in a tomentous time would you like that opportunity to diversify? He said great 12% and six points and I said thank you I’ll take it.

So we started a home building company with a line of credit out of a hard money loan company in Alaska and we started building house and it went great. I had the opportunity to build more houses and I thought you know what I don’t want to pay 12% and six points, let me see who I know in my personal sphere of influence that might want to do that loan. So we started borrowing money at 10% from friends and family type investors and suddenly we had more capital available to us than we could use. So it was a good problem I didn’t have to borrow money at 12 and six any more I can borrow it at a 10 and no points and suddenly I had more money than I could use as a borrower so we started lending it out.

I started brokering deals, finding other homebuilders that needed money to build. So we would borrow it basically at 10 from our clients and make some points on the deal by lending it out and that went well and then we started buying houses fixing them up and selling them to families that had a big down payment, great job, great debt to income ratio, but their credit profile didn’t fit that Wall Street or Fannie Mae, Freddie Mac box. So they couldn’t go get a loan at 4% from Wells Fargo and I said well how much would you be willing to pay for a private loan on the house and it turned out that there’s a whole bunch of people that are willing to pay 10% on 15 year note

to buy a home. So we’d fix their properties, we’d sell them on seller financing and then we’d sell that seller financing paper to our clients that want to have a first position lien at 10% interest rate.

Mark Podolsky: Sure. It’s so good David Campbell but now we’re at that point in the podcast that I get to put you on the spot and explain to you my business model and ask you, do I have the best passive income model like the podcast says. Are you ready David?

David Campbell: I’m ready.

Mark Podolsky: All right so I buy and sell raw land and the ways that I buy it is I look for somebody who’s distressed. And how do I know they’re distressed? They owe back taxes and if they live out of state that’s even better. There’s no emotional connection to that raw land. So we send him a “top dollar offer” typically 20 to 30 cents on the dollar and percentage of those are accepted and then we can flip that property at about 300% return on investment on average.

But my favorite way to sell it is as we’ve been discussing owner financing. So I typically get my money out on the down or within six months of that time and now I have a thousand percent return on my investment, I’ve got a one-time sale, I’ve got recurring income coming in every single month on that note, and I don’t have to deal with any tenants, no renters, no rehabs, no renovations, no rodents. Because I’m not dealing with the tenant I don’t have to worry about Dodd-Frank, I don’t have to worry about RESPA, I don’t have to worry about SAFE Act land is exempt and I’m in a noncompetitive niche, there’s no private equity groups, there’s no hedge funds that are in this unsanitized real estate investing niche. David Campbell do I have the best passive income model?

David Campbell: Mark what I love about your business model is you found something where someone has a need, they’ve got a need to sell that property and there are no buyers. You’re filling that need with a cash offer and then you’re reselling that property by providing the value of seller financing to the marketplace and so you’ve added value each step of the way and you deserve to be compensated for creating that value. I think it’s awesome, I think that is an amazing business model.

If I’m trying to shoot holes in it the caveat is if someone buys that vacant land at a discount because it couldn’t be sold otherwise and then they try to resell it. It’s possible that that land has no value because either for example, it could be in a part of the country where if it’s development land, I’m a developer, sometimes I look at land and say if this land were free I couldn’t pencil a development on this, I couldn’t put a house on this property and sell it at a profit because everything is selling below replacement cost. So I’m going to say a very qualified you have an amazing business model and for people who are looking at getting into the niche you just have to ask the question, do you have the experience or a team that gives you that experience to help determine if that land has value or not.

Mark Podolsky: Right. I’ve done over 5,000 transactions and I’m kind of embarrassed to say it because it sounds so unrealistic, but I’ve never lost money on a land transaction and that’s since 2000.

David Campbell: That’s awesome.
Mark: Yeah. So in our niche if you buy it right it’s really really hard to lose if not impossible.

David Campbell: I love land; I’ve made a lot of money in land but one of my rules as a land purchaser I only buy land that I’m going to consume myself. Either I’m going to develop it myself or I have an end-use for that land immediately. Because one of the challenges of raw land is you buy it if you buy it on leverage, you’ve got a mortgage payment, you’ve got taxes, you have insurance and then it eats. It is negative cash flow so it doesn’t fit that paradigm of my investment philosophy but on the same time I probably made money in land more than anything else. Because even my home building company we make money selling houses but it’s really because we paid a good price for the land.

Mark Podolsky: Right. I love it, I love it. All right one more time I’m going to put you on the spot and I’m going to ask you for your tip of the week, a website, a resource, a book, something actionable with the best passive income our listeners can go right now, improve their businesses, improve their lives David Campbell what you got?

David Campbell: Mark we talked a lot about paper today and I’d really like to help [00:32:44] [Indiscernible] understand some of the terms, hence the mechanics and the nuts and bolts of how paper works and private lending works. So I’ve got a couple resources on my website at for free you can download a very expensive white paper called Hassle free Cashflow Lending that’s on my website at I’ve also got three awesome webinars each of them are an hour long specifically Nuts and bolts of private lending, with the Tax investing strategies for private lenders and How you use self-directed IRA to be a private lender and all those are free videos on my site at

Mark Podolsky: I love it. So my tip of the week is also your site but, which is, you kind of stole my thunder there David Campbell.

David Campbell: You let me go first.

Mark: I let you go first but that’s okay because look I always have a good site to send people to. So how about because we have such a geeky group of listeners have you ever heard of site called This is pretty geeky.

David Campbell: No.

Mark Podolsky: Okay it’s not real estate it’s and it’s just these geeky gadgets that you can go on and see and they’ve got the latest and greatest of whatever geeky gadget you want. But if you want to learn more about building your wealth in real estate please go to and download for free all the resources that David has. Wouldn’t talk about it but your real estate blog is repeatedly named one of the top 100 real estate blogs in America. I want to remind the listeners the only way to get the kinds of quality of guests like David Campbell on the Best Passive Income Model podcast is if you subscribe, rate and review it. So please do that. David are we good?

David Campbell: Mark I am so happy to be on your show today and really excited to be a student of the content on your site. The information that I’ve been able to read and digest is fantastic and no matter how much experience you have as a real estate investor it’s so important to be a perpetual learner. Always be learning, always be studying and as a note investor I love that you’re teaching people how to create paper. I mean you call it LandGeek but the land is just a vehicle for manufacturing in equity that becomes a piece of paper, a note and once they have that note it produces income, it can also be sold. Our company loves buying existing notes. So once you create that paper you can sell it.

Mark Podolsky: Yeah exactly and actually the honors are mine. Thank you so much for taking your valuable time out of your day to share all your real estate investing wisdom with our listeners. I really really appreciate it and if you guys want to learn more about me of course, go to and download for free The passive income blueprint and get the e-book How to avoid 3 fatal land buying mistakes and get this always informative and engaging podcast delivered each week to your email inbox.  Dave Campbell of thanks again and we’ll see everybody next time.

[End of transcript]

21 Ways To Get Out of the Rat Race Faster

Here are 21 ways to compress the distance from where you are now to financial freedom.  I wrote this list specifically for my new friend Don M. but this is some pretty good timeless advice I’d like to share with you.

1) earn more / save more
2) spend less – thus reducing the amount of passive income you need to become financially free
3) start a business parallel to your W-2 so you can: earn – spend – tax rather than the w-2 trap of earn – tax – spend
4) use leverage to create positive arbitrage
5) leverage other people’s time / other people’s knowledge / other people’s relationships / other people’s money / other people’s deal flow
6) be a market cycle investor – buy in a buyer’s market / sell in a seller’s market
7) lower your income tax burden using IRAs / 1031 exchange / long term capital gains rather than ordinary income / HSAs / s-corp tax status to lower self-employment status
8) Be a lifelong learner – study at
9) work with a financial mentor who is financially free
10) invest and work for what the investment and the job will teach you
11) invest in relationships
12) getting rich slow is better than trying to get rich quick and never getting there
13) there will never be a perfect time to launch – take action then make course corrections as you go
14) embrace failure as an opportunity to grow
15) write down your long term goals and your daily to do lists
16) write down your compelling “why”
17) schedule your day and your life – live life by design
18) use your time in your vehicle for studying audio programs
19) protect yourself from negative people and negative environments
20) include your spouse in your financial education and goal setting and dream building
21) get around people who think radically different than you – spending time with “like minded” people is a recipe for producing results you already have – you will become the sum of the people you associate with


Get Rich Podcast Episode 51: featuring DAVID CAMPBELL and KEITH WEINHOLD

Here’s an awesome podcast released today:

Get Rich Podcast Episode 51: featuring DAVID CAMPBELL and KEITH WEINHOLD

What if the real estate market crashes? Our guest, Hassle Free Cashflow Investing’s David Campbell, tells us how to hedge yourself against this with Mortgage Note Investing.

Learn why this could be the ideal time in the real estate market cycle for Mortgage Note Investing. This can provide stable returns to you, yet more liquidity than owning real estate.

Listen to this week’s show and learn:

02:36 You can be the bank. Rather than be the real estate investor, you can be the real estate ender.

05:08 Our guest,‘s David Campbell invests based on the real estate market cycle.

08:58 Terms similar to Mortgage Note Investing are: Hard Money Lending, Private Lending, Deed Of Trust Investing, Seller Financing.get rich podcast keith weinhold

12:36 What’s the minimum amount of money you need for Mortgage Note Investing?

13:20 How you get money for this investment. Arbitrage.

17:10 How Mortgage Note Investing’s advantage over Peer-To-Peer Lending instruments like Lending Tree and Prosper. In a word, the answer is “collateral.”

19:25 Why this is a good time in the market cycle to be a Mortgage Note Investor.

24:35 Many people are equity rich and cash poor.

Ten Rules For A Hassle-Free Cashflow Mortgage Note

Ten Rules For A Hassle-Free Cashflow Mortgage Note

(1) lender friendly state like Texas

(2) 1st position Deed of Trust (not mortgage)

(3) SFR with a min property value of $75K

(4) Less than 75% loan to value

(5) mortgage payments lower than equivalent rent

(6) Borrower debt to income ratio < 45%

(7) lender title insurance paid for by borrower

(8) professional servicing paid for by borrower

(9) professionally underwritten with due diligence available to investor

(10) fully amortized no more than 15 years for houses over 40 years old /  20-30 year amortization OK for newer houses

Want to learn more about private lending?   CLICK HERE to download a free ebook.

mortgage note to stock comparison chart

Should I Buy In Today’s Seller’s Market?

Many of the local real estate markets in America are in a Seller’s market.  If you want to determine if your real estate market of choice is a Buyer’s or Seller’s market  CLICK HERE to read one of my most popular blog articles: “How to Predict Real Estate Prices”

I get this question a lot:  “Should I Buy A Home In Today’s Seller’s Market?”

This is easy to answer from a purely theoretical perspective:  NO!

  • Buy during buyer’s markets.
  • Sell during seller’s markets.
  • In between market cycles have your money invested in well-secured income-producing bonds like mortgage notes.

(Disclosure:  Yes, I sell mortgage notes and I hope you buy lots of mortgage notes from my company.  However, I hope you can read past this author bias because there are a lot of good lessons to glean from this article.  Shameless plug: CLICK HERE to gain access to our current inventory of Hassle-Free Cashflow Mortgage Notes producing 10% annualized ROI.)

When I look at the vast number of buyers in today’s real estate market, I want to shout “WHERE WERE YOU FIVE YEARS AGO?” when it was the best buyer’s market of our lifetimes.    You see it always happens this way… Smart investors buy when everyone is selling.  When everyone is buying, dumb money rushes in and smart money sells.   I’m not saying don’t buy right now.  I’m saying BE SMART about buying.  If you can still borrow at 5% and buy a property producing a +6% return… well, that sounds pretty smart to me.   You see, even though real estate prices are relatively high right now compared to rents,  money is still cheap (as a result of an abundance of Federal government stimulus).   Interest rates are low which means it is a buyer’s market of debt.  Smart investors are still borrowing all the money they can get their hands on at long term fixed interest rates.   What do you do with that cheap money after you borrow it… well, BE SMART and make sure you are “positively arbitraged”.

If you aren’t really, really, really sure what “positive arbitrage” means,  you must absolutely watch this free video series as soon as you’re doing reading this article:   CLICK HERE

After you’re done with the above video series watch this free video training series on real estate investing math.

These two sets of free investor training videos could make you rich, or at the very least they could save you from making some very poor financial decisions.

OK class… everyone turn to your neighbor on the right and explain “positive arbitrage”.   Getting the positive arbitrage formula right (CAP > interest rate) is the razor’s edge difference between financial freedom and bankruptcy.   Positive arbitrage is the most important real estate lesson there is.  Unfortunately, very few people teach it.   If you don’t understand positive arbitrage well enough to teach it, please promise you will watch the above videos and not just gloss over this point.

The question “Should I Buy A Home In Today’s Seller’s Market?”  is harder to answer from an owner occupant perspective because a primary residence is both a consumable item for pleasure and utility as well as a major financial investment.

As long as it is cheaper to rent than own, you are financially ahead to be a renter and go buy rental property in parts of the US where it is cheaper to own than rent (CLUE: this is why so many California investors are currently buying rental houses in Texas).   When real estate prices are at a market cycle low, it could make financial sense to buy a primary residence even if the cost to own is higher than rent if you choose to speculate that when real estate prices return to market cycle norms you will make a bunch of equity that would be significantly greater than the cash flow “losses” you experienced from paying more to own than rent.  The caveat of this formula is that once the market cycle booms, you need to sell your house, reinvest the equity, and go back to renting.  In lieu of selling and going back to renting, some savvy property owners choose to harvest their market equity gains through a cash out refinance and reinvest the capital elsewhere.  That is an excellent strategy as long as you have the positive arbitrage formula right (CAP > interest rate).

Of course, many times the decision to buy a primary residence is made on emotions rather than finances alone and that’s OK too.  Ultimately, the money you earn is designed to bring you the things you want when you want them.   So, if you can afford a house and you really want to own it, then market economics be damned!  A house to live in is really a liability (not an asset) anyway.  If you like the convenience of paying retail prices to get what you want when you want it, then who cares what part of the market cycle we’re in.   A retail buyer will buy something because they want it and can afford it and that’s OK!  I pay retail prices for food all the time. I know it is cheaper eating at home than eating out, but eating at a fine restaurant can be really, really fun.  Sometimes it’s OK to pay retail prices for stuff you want when you want it.  Just make sure you know you’re doing it on purpose.  Dumb money buys the things they want because they want them and then justifies the expense as an investment.  Expenses are fine; just realize that expenses and investments are very different things.

If it is cheaper to rent than own and you’re trying to make a financially intelligent decision, go find a rental situation you are happy in and use your cash to invest where the numbers make sense.   If it is cheaper to rent than own and the house you want to buy is relatively fungible (e.g. not a unique one of a kind property that comes on the market once in a generation) then I would wait until the next buyer’s market to buy a house to live in.  When the next buyer’s market comes along, it will be obvious to you and every one else because the words “foreclosure” and “short sale” will be on the evening news like it was 2009-2011 all over again.

If you have assets in the stock market, I would apply similar advice to the above.   IMHO stocks are in a bubble.  A few months ago, I published a prognosis to my newsletter subscribers that the stock market was at a top and ready to crash.  The DJIA was 18,100 when I made that announcement.  As  you know, the market is currently down significantly from that point.   Two weeks ago, I published to my subscribers that there is a lot more downward movement coming in the stock market.   Today’s DJIA closed at 16,384… that’s a ~10% decline from the market peak just a few months.   After reading my prognosis, a few of my investor clients cashed out of the stock market (at the top) and used their cash to buy well secured mortgage notes paying 10% interest.   These clients achieved an ROI well over 20% annualized relative to where they would have been if they had left their assets in the stock market.  Protecting yourself from loss is almost as good as earning a profit.
mortgage note to stock comparison chart

Of course, no one knows for sure where the market is headed so use your own judgement where things are going and how to prepare accordingly.   Personally, I’m selling real estate in areas where I see a price bubble and moving this equity into income producing mortgage notes, farmland, and silver bullion.  I am also still bullish on the Dallas-Fort Worth metro for acquiring income-producing, positively-arbitraged rental houses.  If you can still borrow money cheaply and you’re looking to build long term equity and tax shelter, I would not be afraid of taking a long term investment position in the DFW rental housing market (HINT:  CAP > interest rate).  If you’re looking for investment opportunities in income producing Hassle-Free Cashflow Mortgage Notes or Dallas-Fort Worth (DFW) rental property, I am here to help you.   Always remember, I offer a free 30 minute investment strategy consultation over the phone to help you navigate the potentially turbulent economic waters ahead.

click to schedule CLICK HERE to schedule your no-cost investment strategy consultation with professional investor David Campbell
Best regards,

David Campbell
Real Estate Investing Strategist
866-931-9149 x1


I was recently invited to speak at real estate investment clubs in Orange County (OCREIA) and Los Angeles (LAREIA) in Southern California.   I had a great time and would like to congratulate club sponsors Kaaren Hall and Bill Tan (respectively) for having such well run clubs.  If you are local to either of these organizations, look them up and go participate!   There was a lot of very valuable information presented and audience attendance levels were relatively high.  I encourage you to check them out online at

Orange County Real Estate Investors Association – OCREIA

Los Angeles Real Estate Investors Association – LAREIA


Best regards,

David Campbell

Real Estate Investing Strategist and founder of Hassle-Free Cashflow Investing

866-931-9149 ext 1

most expensive housing markets in the world

Here’s a cool infographic of the most expensive housing markets in the world. Some of these caught me by surprise.




This infographic of the most expensive housing markets in the world was compiled by and shared with you by permission of the team at:  The company in this link is in no way affiliated with Hassle-Free Cashflow Investing (in fact we have no idea who they are), but we liked their infographic so much we are happy to give them some “link juice” as thanks for their generosity in creating this image for our readers.

If you’re thinking of making an investment in a Seller’s market, read this first…

We are living through interesting times. If you’re thinking about investing in real estate (or anything for that matter) in a Seller’s market, it’s essential to change your investing strategy to respond to different investment cycles.

Amateur investors learn an investing trick that worked once and try using that same trick over and over in all market cycles. That’s like planting corn in your garden every single month of the year. Some months you’ll have a bumper crop and other months you’ll wonder why there is no corn growing in your frost-covered garden. Your mutual fund sales person will call that dollar cost averaging; I call it silly.

There are times for buying and there are times for selling and times for just holding on. Having invested through the last real estate cycle of boom and bust and boom again, I am currently investing a lot more conservatively than I was in 2003-2007. Although real estate is local and there will always be good deals to be found, in today’s market good deals are definitely getting harder and harder to find. That’s because we are in a Seller’s market. In a Seller’s market, amateur investors overpay for properties because they don’t see any other alternative.

Investing 101 – buy as much as you can during a BUYER’S market. My home building company was very aggressive about purchasing heavily discounted vacant lots during the down market. Now that the housing market is booming, we are building houses with the help of contractors like Ideal Construction LLC and selling more houses than ever.

Vacant lot prices have quadrupled from the market bottom making it extraordinarily difficult to find vacant lots to replenish our inventory for future development.

Investing 202 – don’t overpay for assets during a SELLER’S market. Most home builders are currently ‘overpaying’ for the small supply of lots on the market, because they only know one trick – building houses. They have to pay the high market prices for lots because that is the raw ingredient that makes their business run. Many home builders will ‘overpay’ for lots even if that means their profit margins virtually disappear. Because they only know one trick, it means ‘overpay’ for their raw ingredient of lots or go out of business because they have no more lots to develop.

If you’re thinking about buying real estate in a Seller’s market, think long and hard about that decision. Although I don’t think we are at the peak of the current real estate or stock uptrend, I do think we are currently well above where the next market bottom will be for both real estate and stocks. Of course, if you’re buying real estate for long term cashflow and positive arbitrage, it could still make sense to buy today because interest rates are still incredibly low. You could say that real estate is in a Seller’s market, but interest rates are still in a Buyer’s market. If you are buying ‘over priced’ real estate with ‘under priced’ financing and you are positively arbitraged you hold on for a very long time, you’ll probably do very well. (Positive arbitrage is when your CAP rate exceeds your interest rate)

Investing 303 – When equities are overpriced, sell equities and buy bonds. In most of today’s US real estate markets, real estate is now overpriced. Click here to read my blog article “How To Predict Real Estate Prices” to determine whether your real estate market is currently under or over priced. DON’T MISS THIS PROFESSIONAL INVESTOR HINT: I am currently selling most of my real estate portfolio, using the cash to buy mortgage notes, and will sit on the sideline collecting mortgage interest until the equity market / home prices crash. I plan to buy back into the real estate market at the next cycle low. I am currently buying precious metals as their price continues to drop, as well as farmland and timberland as an ultra-conservative hedge against hyper-inflation and a potential currency collapse. Market cycles are very long. It can be a decade or more from market bottom to market top and back down again. Amateur investors do not think far enough into the future. They plant corn seeds in summer expecting to harvest their corn crop in the middle of winter. Sometimes it just makes common sense to stop planting and wait for the proper season for planting to come along.

Investing 404 – Not all bonds are created equal.  Mortgage notes are my personal choice of bonds. The only thing I own in my IRA is mortgage notes. A mortgage note (bond) is a promise to pay secured by a piece of real estate. If the borrower pays me as agreed, I am happy because I have earned a 10% interest rate with no tenants, no toilets, and no vacancy. If my borrower pays late I earn late fees in addition to mortgage interest and my ROI goes even higher. If I buy a corporate or government bond and they don’t pay, I can pretty much write off that investment as a total loss. If I buy a real estate mortgage note (bond) and the borrower doesn’t pay as agreed, I will do the happy dance of joy because I get to foreclose upon the real estate for pennies on the dollar. By restricting my original loan amount to 75% of the property value, I should make a higher return on my money by foreclosing on the borrower’s equity rather than getting paid as agreed. That’s what I call a win-win! If the price of real estate drops and I have to foreclose, I at least have the borrower’s 25% down payment equity as protection from loss. I also have title insurance to help protect my investment from fraud and/or sloppy paperwork.

I am currently focused on buying income producing mortgage notes in Dallas, Fort Worth, and San Antonio Texas. These three cities have excellent population growth, economic diversity, very affordable and stable housing prices, and the foreclosure laws are extremely favorable to lenders. I’ve been buying and brokering mortgage notes in those cities for about five years and I’ve developed an extremely strong system in the process.

Using the strength of my investor network (the same network that brought you to be reading this blog post today), I have developed a steady supply of mortgage note investment opportunities. I promise you won’t find mortgage note investments like these anywhere else, because these notes are specifically created by my team to fit my personal investment philosophy.

All of our mortgage notes:

(1) are in the foreclosure friendly state of Texas and the rapidly growing markets of Dallas, Fort Worth, and San Antonio.

(2) are secured by recently renovated, highly affordable, single family homes in class B neighborhoods near major employment centers.

(3) have strong borrowers with less than 45% debt to income ratio.

(4) are 1st position deeds of trust at ~75% loan to value.

(5) have mortgage payment comparable to the cost of renting the same property. If it is the same monthly payment to rent or own, the borrower has little economic incentive to default. If you do foreclose on a non-performing note, you can resell the property for cash or rent out the foreclosed property and generate about the same net operating income as you were getting from your note.

(6) are supported by a conditional buy back guarantee from Hassle-Free Cashflow Investing giving our investors peace of mind and a secondary source of repayment for their mortgage investment.

(7) are professionally serviced by a licensed and bonded mortgage servicing company.

(8) are self-directed IRA friendly. Our team can handle all of the compliance paperwork for you.

(9) are turnkey and hassle-free.

(10) have lender title insurance in place issued by Chicago Title Company and paid for by the borrower.

(11) have zero investor closing costs associated with the purchase price.

(12) are able to be purchased at a nominal discount below the face value of the note – usually about 99 cents on the dollar and the 10% annualized ROI would be improved if the borrower paid their note off early.

(13) have complete due diligence files available on the property, the loan, and borrower.

(14) are professionally underwritten by a licensed and insured residential mortgage loan originator (RLMO) to be “Frank Dodd compliant”.

(15) are secured by houses who have a minimum value of $75,000.

(16) are fully amortized over 15 years but can be resold for the amount of the unpaid balance at any time.

(17) have a bite sized purchase price between $60,000 – $120,000

If you would like to purchase high-yielding real estate notes secured by 1st position deeds of trust recorded against quality real estate in Dallas-Fort Worth, TX send us an email – or call 866-931-9149 ext 1

To request general information about mortgage note investing, you can read my free white paper – “CLICK HERE for Secrets of Hassle-Free Cashflow Lending” as well as watch this video “CLICK HERE for Investing and Tax Strategies for Mortgage Note Investors” and this video “CLICK HERE for Nuts and Bolts of Being a Private Lender.”

1031 Exchange – Hassle-Free Decision Matrix

Don’t let the tax tail wag the investment dog.  Consult the Hassle-Free 1031 Exchange Decision Matrix to help you decide whether a 1031 exchange makes sense.1031 exchange matrix -


Be sure to read:

Ten Rules for a Hassle-Free 1031 Exchange

by Professional Investor David Campbell founder of


Ten Rules for a Hassle-Free 1031 Exchange 

Ten Rules for a Hassle-Free 1031 Exchange

by Professional Investor David Campbell founder of 

An Internal Revenue Code Section 1031 Tax Deferred Exchange (“1031 exchange”) is a tax and investing strategy that allows an investor to reinvest the profits from the sale of an investment property into another “like-kind” property while deferring the taxes owed on the sale.  The goals of a 1031 exchange can include: increasing or decreasing management intensity, increasing or decreasing risk profile, and/or increasing or shifting (but not decreasing) leverage on your real estate portfolio.

Completing a 1031 exchange can be full of pitfalls even for the most experienced investors.  It requires a combination of investing, financing, and tax strategies that frequently require the seamless coordination of multiple advisors, along with the adherence to strict timelines.  Hopefully, this article will help you avoid the obvious, and some of the less obvious, pitfalls of doing a 1031 exchange. However, this article should not be considered a substitute for competent legal, tax, or investment advice.

  1. Ask yourself if you really need to sell the property.  If you aren’t selling your investment property, you don’t need to a 1031 exchange!   Selling a property involves a lot of transaction costs such as brokerage fees, title, escrow, buyer concessions, and property repairs.  Doing a 1031 exchange means paying all of the costs of selling a property plus the added cost of buying a new property, paying a 1031 qualified intermediary, and professional tax preparation.  It’s possible that doing a 1031 exchange is the best decision for you, but it’s an expensive proposition.  Before listing your property for sale, it is important to explore less expensive options for getting the personal and financial benefits you are seeking without selling your property.  It is a common mistake for novice investors to churn their property portfolio because it makes them feel like they are doing something of value when they might not be creating any measurable benefit from all that buying and selling.   If your goal is to pull equity of a property, considering doing a cash-out refinance or taking a cash-out second mortgage.  Even if the interest rate on the refinance is higher than your current rate, the higher interest expense and refinancing costs might still be less expensive than paying the transaction costs of a sale and 1031 exchange.  You might find an opportunity to use the equity in your existing property as equity in a cross collateral loan to buy a new property.  This cross-collateral financing strategy is likely only offered on commercial and/or privately funded loans.  This is a strategy I have used many times when acquiring seller-financed or privately financed properties.  If your goal is reducing management intensity, look for property management solutions.  There are as many solutions as there are problems.  Selling and doing a 1031 exchange is only one of an infinite number of solutions available to you; don’t rush into it!
  2. Even after you’ve made the decision to sell, should you do an exchange or just realize the profit?  Many investors assume that they should do a 1031 exchange on every property they sell.  Ask your tax advisor if you can use losses from the current or previous tax years to offset the profit from the sale of your property.  Ask your tax advisor if you will owe taxes because of “depreciation recapture”.  It’s possible to buy and sell a property for the same price and still end up with a paper profit and taxable event because of depreciation recapture. One of the rules of doing a 1031 exchange is buying a “like-kind” property.  There are specific IRS rules that define like kind.  (For example: You probably can’t sell a rental house and 1031 exchange into a mortgage note, gold, stock, or LLC partnership interest.  You probably can sell a rental house and 1031 exchange into a shopping center, vacant land or apartment building.)   If you’re selling a profitable property and considering a 1031 exchange, it’s probably because prices are up and it’s a sellers market.   When you are doing a 1031 exchange in a seller’s market, you are setting yourself up to be a buyer in a seller’s market.  That’s less than optimum.  It could make sense to realize your profit on highly appreciated property and then sit in cash until the next buyer’s market or to pay the tax and buy an asset type that is on sale (e.g. sell an appreciated property, pay the tax, and purchase gold or an income producing mortgage note).  It could also make sense to sell highly appreciated property and 1031 exchange into property in a different geography or product type that produces superior cashflow.   Be wary of falling into the trap of purchasing a bad investment through a 1031 exchange just to avoid income tax on a successful investment.  Don’t let the tax tail wag the investment dog.  Consult the Hassle-Free 1031 Exchange Decision Matrix below to help you decide whether a 1031 exchange makes dollars and sense for you.
  3. Know what you want to buy before you sell. What benefits does the new property bring that your current property does not?  By selling one property and exchanging into another, you are saying that the benefits of the new property plus transaction costs will outweigh the benefits of the old property.  When doing a 1031 exchange you must identify the replacement property in the exchange within 45 days days of selling and close escrow on the replacement property within 180 days of selling the relinquished property.  Far too many investors don’t start looking for a replacement property until after their clock starts ticking with the IRS.  The IRS rules for 1031 exchanges are very strict and there are no “do overs” if you don’t follow the IRS timeline to the letter.   Before you even list your property for sale, make a list of the personal and financial benefits you are seeking from the exchange. Then with the help of a competent real estate investment advisor make a list of hypothetical properties that could fit your exchange size and investment criteria.  In short, the time to decide what you want to buy is before you commit to the sale of your relinquished property.
  4. Make sure you have acquisition financing lined up before you sell your property.  A successful 1031 exchange is one that results in no taxable event in the year of sale.  One requirement of an exchange is that you replace all of the debt and equity from the relinquished property.  A very common mistake is that an investor sells their relinquished property and then finds out after their 45 day identification period has expired that the property they identified doesn’t qualify for financing (e.g. non-warrantable condo or can’t get a clean title commitment), or the investor’s credit and income are insufficient to get the loan, or the investor doesn’t have enough cash on hand to satisfy the down payment requirements of their lender.  It is common for an investor to have completed a cash out refinance on an appreciated property long before the date of sale, and when they later sell the property they have a huge paper profit but relatively small proceeds of sale.   If you are selling an appreciated property and will net less than 25% of the sales price in cash, you may have a difficult time acquiring and financing a replacement property without injecting cash from outside the exchange or creating a taxable event by purchasing a property for a lower price than the property you sold. Make sure you know you have your financing strategy in place before the 45 day identification clock runs out!
  5. Get contractual control of the property you want to buy before you sell.  I’ve had investors who naively let their identification period expire without having the contractual right to buy the properties they identified.  Formally identifying a property to your qualified intermediary that simply looks nice on the internet is a recipe for 1031 disaster.  Even if you’ve written a full price offer on the property it doesn’t mean you’ll successfully get the property in contract or to the closing table.  Absolutely never let your 45 day identification period expire without having at least TWO suitable properties IN CONTRACT (see rule number 7 below).  No exceptions!  The time to set yourself up for success in the negotiation of your replacement property is when you are negotiating the sale of your relinquished property.  Do everything you can to include a purchase contract clause in the sale of your relinquished property such as “Seller may delay the close of escrow as needed to identify a suitable replacement property for Seller’s 1031 Tax Deferred Exchange.” (Consult your legal advisor!)  Then ideally you shouldn’t close escrow on your relinquished property (thus starting the 45 day identification period) until you have a suitable replacement property IN CONTRACT.  Did I say “IN CONTRACT” enough times?!?! It’s that important.
  6. Have your due diligence and seller repair negotiations completed before the end of your 45 day identification period. If you let your 45 day identification period lapse and you haven’t finalized your physical inspections and repair negotiations with the seller, you can be sure that the seller will have the upper hand in your negotiations.  Don’t forget to complete your review of the title commitment during your 45 day identification period.  Most investors never look at or even ask to review the title commitment because they don’t know what it means or how it is relevant to their due diligence.  You can be sure your lender will be looking at the title commitment and that could be difference of getting a loan and not getting one.  The title commitment might also reveal a cloud on title that the seller might not be able to cure during your 180 day exchange period.   It is rare to have a title issue that can’t be cleared in 180 days, but you don’t want the success of your exchange riding on something totally out of your control.  You don’t want to find yourself having to choose between buying a rotten property or paying a huge tax bill for failing to buy the property you’ve identified.
  7. Identify a safety net property owned by a friendly party.  There are multiple ways of calculating how many properties you can identify for your exchange. If you are planning correctly, you don’t have to buy all of the properties you identify.  The rules for identifying more properties that you eventually purchase can be complex so be sure to get professional advice on this point as early as possible during your 45 identification period.   Always identify the property you really want to exchange into plus at least one spare.  Your spare property should be a safety net property owned by a friendly party as insurance against your first choice property falling apart.  Even if you don’t want to own the safety net property long term, you can close escrow on your safety net property and immediately resell it allowing you to restart your 1031 exchange clock.
  8. Make a calendar with the critical dates of your 1031 exchange.  This is a simple concept that is so rarely implemented.  Your qualified intermediary will help you identify the critical dates your 45 day identification period and 180 day close of escrow requirement will expire. Be sure to communicate these dates to your broker, your lender, and the title company.  If your title company and lender are notified at the last minute that you are intending to complete a 1031 exchange as part of the purchase of your replacement property it can cause significant delays which ironically could push your closing past a critical deadline and thus cause your 1031 exchange to fail.  One of the keys to a Hassle-Free 1031 exchange is open communication and not waiting to do things at the last minute.
  9. Choose your 1031 exchange team wisely.  1031 Exchange Qualified Intermediaries (QI for short) are not required to be licensed, regulated, audited, or monitored by any regulatory body.  Neither are they required to be bonded, insured or maintain any other form of minimum equity capitalization.  Basically, pretty much anyone can start a 1031 Exchange Qualified Intermediary and begin administering 1031 exchange transactions.  A low quality QI can cause your 1031 exchange to fail and you could be stuck with a huge income tax bill.  Even worse your QI could lose or embezzle the capital they are supposed to be holding in trust for you.  Your choice of QI is critically important to your success.  Never pick your 1031 Exchange Qualified Intermediary solely based on their fees.  Although I generally prefer spending my money at local small businesses, when it comes to hiring a qualified intermediary for your exchange you’ll want to choose a very large and well respected player in the QI industry.  You will definitely want to hire a real estate broker and/or real estate investing strategist who has a lot of experience completing 1031 exchanges.  The vast majority of residential real estate agents have never completed a 1031 exchange.  You may need to expand your network outside of your local market to find an experienced broker who specializes in investment property to advise you in your 1031 exchange transaction.  Our company would gladly offer you a referral to a strong investment broker and/or Qualified Intermediary.
  10. Download and read this free ebook “Guide to 1031 Exchanges”.   In this free ebook you will learn: how to comply with the basic 1031 exchange rules, tax deferral and exclusion strategies, four types of exchange structures, the role of your Qualified Intermediary, and what a qualifying use property is.  You can download your free copy CLICKING HERE.

If you are contemplating a 1031 exchange, the author of this article, David Campbell, would be happy to offer you a no-cost investment strategy phone consultation to see what insights he can bring to your unique situation.  You may schedule your free consult by CLICKING HERE 

The founder of Hassle-Free Cashflow Investing, David Campbell, started investing in real estate part-time while he was working as a full time high school band director with zero net worth.  Within six years and before the age of 30, David had become a financially independent millionaire through the vehicle of part-time real estate investing.  David left public school teaching in 2005 to focus on real estate development and commercial real estate investment brokerage. His company’s investing and advisory experience has included single-family houses, apartments, retail, office, medical, condo-conversion, net-leased properties, syndications, land development, production home building, private lending, and winery.  David has been a featured guest on some of America’s top radio shows and investing podcasts.  His blog has been repeatedly named one of the top 100 real estate blogs in America.  David is widely recognized as a cashflow real estate investing expert with real estate transactional experience totaling in the hundreds of millions of dollars.

1031 exchange matrix -

Mortgage Note Investing and Tax Strategies


Join us for a webinar on May 06, 2015 at 12:00 PM PDT.

Register now!

In this FREE 60 minute webinar presented by uDirect IRA, Keystone CPA, August REI, and Hassle-Free Cashflow Investing, you’ll learn:

* How to make money as the bank by acquiring an income producing mortgage note secured by quality real estate

* Why now is the best time in the market cycle to acquire a mortgage note

* How to buy a mortgage note to create a portfolio of tax-free and tax-deferred passive income for life

* How to acquire rental properties for pennies on the dollar using the hassle-free “loan to own” investment strategy

* Which states are investor friendly for owning a mortgage note and which states to avoid

* The 7 most important questions to ask when analyzing the purchase of a mortgage note

* Why the most savvy investors are buying real estate outside of their IRA and buying mortgage notes inside their IRA but usually not the other way around

* 3 tax strategies for maximizing your after tax profits as a mortgage note investor

* tips for working with a note servicing company to make mortgage note investing hassle-free

Meet the faculty for this event:

Kaaren Hall, president of uDirect IRA Services, has helped thousands of Americans invest their IRA outside of the stock market to improve their financial future.

David Campbell, founder of Hassle-Free Cashflow Investing, helps investors like you acquire turnkey rental properties and income producing mortgage notes with less hassle. As a principal or key advisor to hundreds of millions of dollars of real estate transactions, David has a unique ability to simplify complex financial ideas into easy to follow action steps.

Amanda Han, CPA, Director of Business Development for Keystone CPA, brings over 18 years of experience in taxation and accounting with special emphasis in real estate and individual tax planning. Amanda is a leading expert on self-directed IRA investing.

Amy Sayer is President of August REI, a Residential Loan Servicing Company. Amy is a recognized expert in debt collection and mortgage loan servicing.

After registering, you will receive a confirmation email containing information about joining the webinar.

Hassle Free Cashflow Investing

Côte d’Azur as a potential property investment

Côte d’Azur as a potential property investment

Guest blog post from Блажеев Кирилл Tranio.Com

The Côte d’Azur which is known in English as the French Riviera is one of the most popular tourist destinations in the world. This Mediterranean coastline in the southeast of France is famous for rich cultural heritage, wine and unique traditions of cheese making, numerous events. French mild sunny climate and absence of tiring heat make stay in this place comfortable for each guest. International real estate experts admit that today’s France is one of the best facilities for international investments in property. So if you are interested in property for sale in the Côte d’Azur, go to the link . Specialists of Tranio.Com will help you find the best property, connect you directly with agencies, developers and owner and will accompany you during all stages of buying an apartment or a house.

Earlier the main interest of investors was associated with buying property for personal use.  In the last two years there has been a large increase in the purchase of property for subsequent lease. This fact is easily explained. The number of tourists per capita in France is 2.33 per year. This is the highest rate in the world. This influx of tourists provides a high and steady demand for rental housing and hotel services.

Most of French big banks offer mortgages to foreigners, although the requirements for non-residents are more stringent than for the locals. The state strictly controls all aspects of the mortgage, so it is considered to be one of the safest in the world.

Interest rates for foreigners are 2.5–4.5 % per annum plus insurance rate about 0.2–0.3 % which is obligatory for French banks.  Non-residents may take out a loan not more than 60–70 % of the purchase price, the term of payment is from 5 to 25 years, the minimum threshold of the loan is 80,000 euro, the borrower shall pay the mortgage till 70 years.

The Côte d’Azur is a popular prestigious resort, the largest city of which is Nice. The region is famous for marinas where you can see luxurious yachts. About 90 % of all super yachts visit the French Riviera at least once in their lifetime. No one can stay indifferent to almost the whole year shining sun, more than one hundred kilometers of gold beaches, golf, skiing and dainty dishes at excellent restaurants.

This is a guest blog post from Блажеев Кирилл Tranio.Com

Creating profits in a seller’s market

The feedback I get from investors across the country is that we are in a seller’s market.  Prices are up.  Inventory is low.  Properties in the hottest markets are selling over asking price with multiple offers.  Investors are paying “more than they want to” just to get a deal done.  The ratio between rents and purchase price is favoring sellers and squeezing investor buyers out of the market. Another way to describe this trend is that CAP rates are decreasing, or “compressing”.  We are approaching a delicate part of the market cycle where the flood of inexperienced investors is driving prices up to places where experienced investors shake their head and wonder, “How is the winning bidder ever going to make a profit?”

Wouldn’t life as an investor be easier if the market gave you clear signals about the future?  Interpreting investment signals is a mix of science, artistry, and luck with a bit of clairvoyant magic thrown in.  In today’s blog, I’ll share a few of the directional signals I use in making real estate investment decisions.   I will also talk about what investment strategies and buying opportunities I am excited about in today’s seller’s market.

A common mistake investors make in reading market signals is what I call, “You see what you look for and you look for what you know.”  If you are seeing prices going up all around you and all you are looking at is prices, it would be natural to assume that if you buy now the price will go up next month.  As sophisticated investors, we know this is not true and we need to learn to look beyond price and historical price trends.  Appraisers are trained to look at what price similar properties sold for in the past 3-6 months.   Appraisers are required to always look in the rear view mirror at prices in the past.  In an upwardly trending market, homes will be selling higher than appraised value.  It makes sense that if your home is in contract at a price higher than the previous sales comps, it won’t appraise at the contract price.  A low appraisal doesn’t mean a home isn’t worth the contract price.  A property is worth what a reasonably motivated buyer and seller agree to.  A maxim to remember in real estate: “You will overpay for every property you ever buy; if someone else is willing to pay more, they, not you, will become the property owner.”

Simple economics teaches us that as you lower the price of your property there are more buyers.  As you raise the price of your property there are fewer buyers.  However, if you only have one property to sell, you only need one willing buyer.  In a seller’s market, the seller of a performing income property is not typically in a rush to discount the price to find a buyer.

Hassle-Free ways to create profits in a seller’s marketThis graph illustrates the yin-yang relationship between pricing and quantity of buyers. The centerline represents market value.  As you move above this market value, you attract a smaller percentage of prospective buyers, reducing your chances of a sale which typically increases the time it will take to locate a buyer at that price. Conversely, as you move below market value, you attract a much larger percentage of potential buyers which typically shortens the time it will take to locate a buyer at that price. One of the important take aways from this illustration is that there is a range of market prices for every property. Take appraisals with a grain of salt.  Appraisers don’t provide a price range; they must isolate a single market value based on a subjective series of adjustments to historical prices.  The marketplace where investors compete represents all of the “bid” and “ask” prices of buyers and sellers in real time.  That’s why you will see buyers in a seller’s market paying higher than appraisal.  That’s also why you will see sellers in a buyer’s market selling for less than appraisal.

Appraisals are “lagging indicators” of value, not “leading indicators” of value.   A lagging indicator confirms a previous price trend but it does not predict the future.  A leading indicator helps you predict the future.   When you hear someone say, “You should buy in such and such hot market because prices appreciated XYZ percent in the past year,” remember that person is describing a lagging indicator of value not a leading indicator. If you would like to see into the future of real estate, look for leading indicators of value not lagging indicators.

You will have an economic advantage if you know how to evaluate the leading indicators of real estate demand, supply, and one of the most overlooked real estate signals – affordability ratio. To learn more about using leading indicators to predict the future of real estate prices use this link to my blog article Predicting Real Estate Prices.   If you enjoy the article, please leave a comment or question below.

While you can’t change the signals you are getting from the market, you CAN change your investment strategy depending on what signals you are getting.   We are currently blessed with incredibly low long-term fixed interest rates.  Low interest rates are a signal for how to invest.  While current prices are high relative to rents, interest rates remain low.  One of the best assets to acquire in this seller’s market is the ability to control long term fixed low interest rate debt and to use that debt to create positive cashflow now and in the future.

If you can borrower long term fix rate money at 4% and invest in a property or note that produces a profit of 6% or more, how much money would you like to borrow?   As much as you possibly can!! This strategy is called arbitrage.  Positive arbitrage means you are making money on the bank’s money.  You can’t do anything about today’s high prices, but you can focus on winning through positive arbitrage.   Over 30 years you will make more money paying a “seller’s market premium” for a property and financing it with today’s insanely low interest rates (4-5%), rather than buying cheaply at the bottom of a “buyer’s market” and financing it with traditionally historical interest rates (7-8%).

Here are two Hassle-Free ways to create positive arbitrage in today’s seller’s market.

Option one is for the long term investor (10 years or more) who is (a) targeting higher yields, (b) is willing to take on a little more risk to achieve higher yields, and (c) is looking for a blend of positive cashflow, tax benefits, equity build up, and shelter from inflation.  The formula is simple: buy a rental property whose CAP rate is greater than the interest rate on the financing used to acquire the property.   A good goal is to achieve at least a 2% spread between the long term fixed interest rate and the CAP rate. While you may be able to achieve a CAP rate to interest rate spread higher than 2%, you may not like the quality of property that comes with higher CAP rates.   Hassle-Free Cashflow Investors gravitate towards newer properties that are lower hassle to manage and have lower risks associated with property maintenance. Watch this video series to learn more about this investing strategy.

Option two is for the income investor who is looking for a combination of safety, semi-liquidity, and immediate cashflow. The formula is to borrow money at a low rate to be a lender at a higher rate.   You can borrow capital (aka equity stripping) at today’s long term fixed interest rates around 4-5% from a bank using equity in properties that you currently own.  You then use the proceeds of the loan to buy income producing notes (aka hard money lending) secured by quality real estate in first position at conservative LTVs that produce interest income of 8% or higher.   For example, if you borrowed $100,000 against your $125,000 free and clear rental property (80% LTV) and you make a $100,000 loan @ 10% secured in first position against a single family property valued at $133,333 (75% LTV) you would have two assets – a house and an income producing note  – and you would have one liability – the mortgage on your $125,000 rental property.  The income from the note @ 10% interest rate would produce $10,000 a year income and the cost of your rental property mortgage @ 4.5% interest rate would consume $4,500 of interest expense.   You can create a $5,500 annual profit out of thin air just by moving $100,000 equity from an existing property into equity in an income producing note.   Remember, you still own the rental property and the profit from the rental property is exactly the same.  The profit comes from putting your equity to work in two places at the same time your equity controls the property and the note at the same time.   Assuming the income producing note is in first position at 75% LTV, if the borrower stops paying you can foreclose on the asset and it’s like buying the property at a 25% discount.  In fact, some hard money lenders prefer making loans to borrowers who are unlikely to repay the loan.  They call it a “loan to own” investment strategy.  Making hard money loans in a seller’s market is a great way to produce income and potentially acquire real estate at steep discounts you are unlikely to find in the currently competitive seller’s market.

If you are looking to accelerate your wealth through income producing notes, please email to receive access to our current inventory of income producing notes  / private lending opportunities.

If you are looking to buy turnkey positive arbitrage rental properties, please click here to view our current inventory of hassle-free cashflow rental properties.

If you’d like help refining your personal investment philosophy, please click the link below to schedule a free consultation with professional investor David Campbell.

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To your success,

David Campbell
Professional Investor
866-931-9149 ext 1


Best Real Estate Investing Advice Ever

When I find myself in a recorded interview environment, which I often do as a financial educator, I don’t usually know the questions coming my way until the interviewer opens his or her mouth.  I’ve got to think on my feet.  I improvise.  I do my best to sound intelligent even though the answer to the question still hasn’t fully formed in my head.  It’s a lot like being a jazz musician, or the parent of an inquisitive young child who asks difficult questions you didn’t see coming.  After several dozen radio, TV, and newspaper interviews, talking to the media has gotten easier.  Responding to my child’s difficult questions… well, I’m still practicing that one.

In my interview today as a guest on the “Best Real Estate Investing Advice Ever,” the host of the show, Joe Fairless, ended the show with what he called the “lightning round” where he asked some rapid fire questions:

What your best real estate investing advice ever?
What book has given you the best real estate investing advice ever?
What event or audio program has given you the best real estate investing advice ever?
What’s the best real estate investment you’ve ever made?

If I had a week to prepare, I could talk for hours responding to each of these questions. Maybe for the sake of brevity, radio guests don’t get time to prepare their answers.  Or maybe it’s exciting to hear each guest drool into the microphone while trying to form a coherent thought!

If you’ve been following my investment blog and videos for any length of time, you can guess my best real estate investing advice ever:  “Buy Hassle-Free, positive cashflow property whose CAP rate is higher than your long term fixed interest rate and get as much of this positive arbitrage debt as possible.”   A Hassle-Free property is a property you understand.  You won’t lose sleep at night  because you own it. That usually means buying new or like-new single-family houses, but it can also mean buying net-leased shopping centers, self-storage, billboards, leased land, or any other cashflow producing piece of real estate that YOU understand and feel comfortable with.  I generally steer new and part time investors towards like-new houses because of the incredibly attractive long-term fixed interest rate financing available for rental houses compared to other investment properties.

On the “Best Real Estate Investing Advice Ever Podcast”, I said the most helpful book I’ve ever read was “Think and Grow Rich” by Napoleon Hill.   What I should have said, “Think and Grow Rich is the best TITLE I’ve ever read.”  The book itself is awkward to read and a little bit cryptic at times.  But, the idea that I can grow rich if I only think the way  rich people think is powerful for me.  It also turned out to be true!

After the “Best Real Estate Investing Advice Ever Podcast” recording was over, though, I texted the host of the show  – Joe Fairless – that I wished I could change my answer.   I wish I had said the most helpful book I’ve ever read is “The Clipper Ship Strategy” from the Uncle Eric series by Richard Maybury.  clipper ship strategy by richard mayburyUnless you run in homeschooling circles, you probably aren’t familiar with this great book.  It is an easy and quick read written at an 8th grade reading level.  Although this book doesn’t contain the “Best Real Estate Investing Advice Ever”, the concepts in the book were nevertheless profoundly helpful to my business philosophy.  The general concept is that clipper ships are much faster than cargo ships, but they also hold a lot less cargo.   If you can be quick to market like a clipper ship, you will make a lot more profit than a cargo ship that enjoys cost efficiencies but is very slow to get to market.   Remember in the 1990s when they piled Cabbage Patch dolls into the seats of 747’s so they could fly from China to the US in time to meet Christmas demand?   The Cabbage Patch dolls that arrived a month after the Christmas rush were cheaper to produce but also sold for less than half as much. That’s a great example of the clipper ship strategy in action.  Now go read the book!  You can buy it on Amazon or through Blue Stocking Press and you’ll probably read it in one or two afternoons.

The event / audio program that changed my life is undoubtedly the “2003 Weekend Event: Excelling In The New Millennium” featuring Jim Rohn, Dennis Waitley, Brian Tracy, Zig Ziglar, and Charlie “Tremendous” Jones.   I remember listening to that audio program over and over and over again while driving to my job as a band director from 2003-2005.  And since I retired from being a band director in 2005 as a self-made real estate millionaire, the program must have worked!  As I listened to that CD set, I knew I was literally reprogramming how I looked at the world.  Listening to programs like this one in the car every day for years changed my thinking, which changed my actions, which changed my peer group, which changed my life.  Sometimes the best real estate investing advice comes from non-real estate places.  Turn off the radio in your car and put on some programming that will challenge you to think about creating a life by design!

When asked about the best real estate deal I’ve ever done, I was stumped.  People ask me for my best real estate investing advice all the time, but there was something intimidating by the addition of the word “ever”.  It’s a good thing this wasn’t live radio because I just sat there in silence like a deer in the headlights.  There were so many voices in my head competing for attention all at once.  Do I talk about the deal where I made a ton of money…    Do I talk about the deal where I lost a ton of money but learned so much from the experience… Do I talk about the high profile deals that sound so impressive… Do I talk about the low money down deal that brings in a cashflow stream every month and follows the principals of Hassle-Free Cashflow Investing…  dozens of ideas were flowing through my brain at a mile a minute. The host said, “David, are you still there? Did you hear the question?”  I rallied and talked about a specific deal that teaches some of my best real estate investing advice but is a rarely used investing concept called “over-financing” a property.  The concept of “over-financing” is to buy a property at a steep discount but then take out a loan against the property based on its market value so your loan is greater than the purchase price.  I’ve “over-financed” several properties in my life.  It generally means that you not only bought a property at a great value, but you get cash back at the close of escrow.   These deals are few and far between and it generally means that you’ve put in a lot of sweat equity into finding and/or financing a deal creatively.  I was able to buy a piece of land for $50 that was worth $100 and I got a $60 loan on the property (60% LTV) which means I put $10 of cash in my pocket at closing. Then I had a nice piece of land to develop for a nice profit in the future!

Best Real Estate Investing AdviceHere’s some more of my best real estate investing advice that I wish I had included in my guest appearance on the “Best Real Estate Investing Advice Ever Podcast”: (1) if you’re afraid of the stock market, you should be!,  (2) if you are afraid of debt, you’re doing it wrong, (3) if you think you can, you can, (4) if you think you can’t, you’re also correct.

I hope these ideas and those found on my blog will be helpful to you in your quest for financial freedom and the best real estate investing advice ever.

If you are looking for opportunities for investing, you aren’t alone!  There are currently more investors than good deals at this time in the market cycle.  You’ve got to look harder for good deals now than you did in 2011!  One of the values of being connected to a company like ours is that our investor relationships and media presence give us access to quality investment property throughout all investment cycles.  If you are looking for investment property, don’t keep it a secret;  be sure to give us a call and see what we can do to earn your business!


All the best,

David Campbell – professional investor and founder of Hassle-Free Cashflow Investing

866-931-9149 ext 1


keyword: best real estate investing advice

Strategies for investing when it’s not a buyer’s market…

Strategies for investing when it’s not a buyer’s market…
by David Campbell – professional investor, developer,
and founder of Hassle-free Cashflow Investing
Investment strategy and markets move in cycles or circles.
There are optimal times for buying assets and optimal times for selling assets based on the overall movement of prices within the market cycle.  While investment markets are moving in a cycle, your personal investment needs are also moving in a totally unrelated cycle based on the seasons of your financial life. There are optimal times for buying assets and optimal times for selling assets depending on the changing seasons of life (personal investment cycle) and what expectations you place on your current financial resources at any moment in time.
personal investment cycle - Investment strategy
As Murphy’s Law would have it, the complexities of your personal financial life and Investment Strategy will never line up perfectly with the overall movement of the financial markets the way you would like them to.  You will find undoubtedly yourself out of position to acquire all the assets you want during an amazing buyer’s market and you may find yourself out of position to sell all of the assets you want during an amazing seller’s market.  Also remember that each phase of the investment “market cycle” can last three or more years and each phase of your “personal investment cycle” can last for ten or more years. The odds of your “personal investment cycle” lining up perfectly with the “market cycle” are not very good.

As I write this article in November 2014, your stock market accounts are probably bubbling over with record high share prices.  You may have a desire to re-allocate some of your net worth from the “dangerously high” and volatile “seller’s” stock market into tangible, cash-flowing, investment real estate.  You may also feel slightly disappointed you can no longer find the once in lifetime buyer’s market deals that were available in 2010-2012.   It seems easy to make money in real estate while prices are low and headed up, but sophisticated investors know there are opportunities to make money in real estate in ALL market cycles.  When upward price momentum slows down (like now in 2014), it becomes extra important to surround yourself with a support team to help you maximize profits.

Investment Strategy #1:  Become a Geographically Agnostic Investor.  Real estate is local.  If your local real estate market experienced a +50% increase in prices from 2010 to today (2014), it’s highly likely your local market is currently in a “transitional top market”.  If your local real estate market is still affordable (median home price is less than four times the median annual income) and home ownership is cheaper than rent, it’s probable you are still in a buyer’s market.  If you are willing to look outside of your local geography, you will always find a “buyer’s market” that is happy to accept your capital at the same time you are ready to buy. If you are stuck in the mindset of buying locally, you will inevitably find yourself ready to buy as a result of your “personal investment cycle” while your local geography is going through the “Seller’s Market” part of the “Market Investment Cycle”.  Our company currently has access to turn-key, hassle-free cashflow rental properties in areas of the country that are still in a “buyer’s market” (good affordability and rents are higher than the cost to own).  CLICK HERE to preview our current inventory of Hassle-Free Cashflow Investment properties.  

Investment Strategy #2: Debt is currently in “buyer’s market” so get all the good, long term, fixed interest rate debt you can.  Debt and real estate travel through market cycles at different times.  Although real estate prices have come up, debt remains very inexpensive.  “Good debt” is fixed interest rate debt that is used to purchase an asset whose income yield is higher than the cost of borrowing. Today you borrow at a low rate and invest at a higher rate (called positive arbitrage) while participating in very low risk investment activities.  At other times in the financial market cycle, debt will be in a “seller’s market” which means interest rates will be high and to create positive arbitrage on your money you will need to chase aggressive (risky) investments to out earn the cost of borrowing. When you borrow money at a fixed interest rate and you lend out that money at a fixed interest rate, you have a predictable investment yield.  Right now you can borrow to lend at a fixed arbitrage spread and acquire relatively low risk mortgage assets with the proceeds of your borrowing.   If you borrow money out of your primary residence at the historically low fixed interest rate of  4% and you lend that money well secured by a first position mortgage lien on a property, you can earn the lucrative interest rate of 10%.  Let’s see… if you Borrow at 4% FIXED and invest at 10% FIXED, the result is a 6% arbitrage spread.  If you borrowed $100,000 at 4% at an interest cost of $4,000 per year and you loaned that money (well secured by a 1st position real estate lien) at 10% at an interest earning of $10,000 per year, your profit is $6,000 per year and your ROI is infinite because you are making a return on entirely borrowed capital. I will say this again because it bears repeating… debt is in a buyer’s market right now, so get all the good debt you can while long term fixed rates are low and then re-lend that capital at a predictable arbitrage spread for a relatively low-risk and highly lucrative cashflow investment.   Give me a call 866-931-9149 ext. 1 or send an email to  to gain access to our current inventory of Hassle-Free Cashflow Investment PRIVATE LENDING OPPORTUNITIES for mortgage income investors.  

Investment Strategy #3: Chase The Buyer’s Market by Changing Asset Classes.  When the stock market is high, consider buying gold and silver.  Metals tend to go up in price when the stock market declines. Metals tend to go down in prices when the stock market goes up. When stocks are high, sell stocks and buy metals.  When stocks are low, sell metals and buy stocks (if you invest in the stock market which I do not).  Give me a call 866-931-9149 ext. 1 or send an email to if you would like more information on adding precious metals to your investment portfolio or self-directed IRA.
Pricing of residential real estate and commercial real estate do not always move in the same direction at the same time.  You might find housing to be “over priced” at the same time the commercial real estate market is “under priced”.   You might find yourself selling a few rental houses to exchange into a shopping center or vice versa.  CAP rates (rent to purchase price ratio) are still very favorable to buyers of NNN leased income properties in many parts of the country.   Give me a call 866-931-9149 ext. 1 or send an email to if you would like to speak with a broker about the potential of adding income producing NNN leased commercial real estate to your investment portfolio.
To your success!
David Campbell
Real Estate Investing Strategist / Developer
Founder of Hassle-Free Cashflow Investing
Office: (866) 931-9149 Ext. 1
Cell: (707) 373-9966

Borrowing To Invest Can Increase Cashflow and Lower Risk

Borrowing To Invest Can Increase Cashflow and Lower Risk –  Deploying existing real estate equity owned by you or your friend.   Borrowing to invest can be a potentially obvious investment strategy that I would like to put a creative twist on for you.  Borrowing to invest in real estate or notes using a cash out mortgage or line of credit against real estate  you already own can have very powerful results and can often improve your cashflow and LOWER your risk.  Here’s how:

My client owned a primary residence valued at $500,000 and had a $300,000 first mortgage and $200,000 of equity.  The client refinanced the property with a new $400,000 first mortgage and pulled out $100,000 of investment capital.   His net worth was the same before and after borrowing to invest; he just moved half of his equity into cash.  He then took the cash and purchased two $50,000 notes totaling $100,000, secured by $140,000 worth of real estate.   The client borrowed the money from his primary residence at 4% and invested it into notes paying 10%. 

$100,000 borrowed capital x 4% = $4,000 interest expense
$100,000 invested capital x 10%  = $10,000 interest income
$10,000 interest income – $4,000 interest expense = $6,000 annual profit

On a simplistic basis, we can see borrowing to invest was a profitable move because the fixed cost of funds was lower than the fixed earning rate. Let’s look a little deeper at the cashflow on this deal.

The $100,000 of extra mortgage expense at 4% on a 30 year fully amortized loan is a cashflow outgo of $477/month.
The $100,000 investment notes at 10% interest on a 15 year fully amortized loan is a cashflow income of $1,075/ month.
$1,075 cash in less $477 cash out = $598 positive cashflow

(Albeit, not all of the $598 is profit because we are dealing with principal and interest payments using two different amortization schedules (expense is 30 year and the income is 15 year).
The above is a great example of how being a borrower and using the concept of positive arbitrage can improve cashflow. The investor client is happy because he improved his cashflow position by $598 per month simply by signing his name a few times, but he is also happy because this situation LOWERED his risk. Here’s how:

When your monthly cashflow improves, your risk goes down because you have more liquidity to service your debts and build up cash reserves.

When the investor moved $100,000 of equity from his home into first position debt secured by other real estate, he moved the asset from higher risk “equity” to lower risk “senior debt”. Let me go deeper into this concept.  If the investor loses his job or credit in the future, he would be unable to tap the equity in his home without selling his primary residence.  However, by moving the equity from his home into first position liens on other property, he has the peace of mind that if he ever loses his job and wants to tap the equity in his home, he can always liquidate the notes for cash.  

The investor has also insulated his assets from the potential of real estate price declines.   If the investor had not moved his equity from his primary residence and real estate prices decline 40%, his $500,000 property would be worth $300,000, less the $300,000 of original debt, so his net equity would have gone from $200,000 to $0.   If he sold his house at this point in the market, he would have zero cash from the sale and he certainly wouldn’t be able to refinance any equity out of her home because there would be no equity.

By borrowing to invest his equity into first position notes, his liquidity is more insulated from loss.  His $500,000 property declines to $300,000. Less $400,000 of debt, that means he has a $100,000 negative equity in his primary residence but he doesn’t have to sell his primary residence until the market recovers. Remember, when investing in real estate the value of a property only matters when you are selling or refinancing. The main concern the investor is insulating against is not a change in profitability but a change in access to liquidity.  Even if the notes go bad (always a risk), the investor will end up owning the underlying real estate. Ideally, the foreclosed houses would make great rental properties and would produce more rental income than what he was originally receiving in interest income from the previous owner.  However, if he decided to sell the foreclosed real estate, even if that real estate had gone down in value, it would not have declined to zero as the equity in his home did.  Moving your at risk “junior” equity into positively arbitraged “senior” notes while you have the equity and credit available to you would be the lesser of two evils in the event of large price declines.   

Here is another risk mitigating bonus for my investor client:   The investor owned a home in a high priced state and was concerned that the state’s economy and home prices might be fragile and unaffordable in the future.  He moved his at risk “junior” equity from his high priced state into “senior debt” secured by entry level real estate in Dallas, Texas, which is a more vibrant and diverse economy.   The investor felt that moving the equity out of his primary residence into a senior debt allowed him to (1) improve his immediate cashflow, (2) allow him to have access to this equity in the future regardless of his employment or credit position, (3) gave him options for liquidity in the future even if there are massive price declines, and (4) it gave his investments geographic diversity by moving a portion of her equity to Texas.   

In addition to borrowing to invest in real estate and cashflow producing notes, I encourage you to watch this free video series where we discuss your “Eight Essential Resources” and how to use them to produce real estate profits:

If you would like help borrowing to invest, formulating your personal investment strategy, or if you would like to learn about current Hassle-Free Cashflow investment opportunities please give me a call at 866-931-9149 ext 1 or schedule our phone call using this link to my calendar.
To your success!
David Campbell

Real Estate Investing Strategist

Office: (866) 931-9149 Ext. 1

Cell: (707) 373-9966
borrowing to invest

Create Cashflow Using A Loan From Your 401(k)

Create Cashflow Using A Loan From Your 401(k)  –  If you have a 401(k) plan you may be able to create cashflow by borrowing against your 401(k) to create a pool of cash to invest for investing in real estate. (Check with your plan administrator and tax advisor to make sure this would work for you!)  If you use the proceeds of your 401(k) loan for investing in real estate you may be able to pay interest to your 401(k) that is tax-deferred income to your 401(k) (A GOOD THING) and take a present day interest expense tax deduction on your personal tax return (A GOOD THING).   Let’s say you borrowed $50,000 from your 401(k) for investing in real estate and then paid 4% interest per year to your 401(k), your 401(k) would be earning a 4% return ($2000), tax deferred, while you would have a $2000 deduction on your personal return. Let’s say you then invested the $50,000 from your 401(k) into a note and trust deed to create cashflow at 10% interest rate ($5000 profit per year). You would have $5000 of interest income less $2000 of interest expense (to your 401(k) which means $2000 of your note income would be tax deferred as earnings to your 401(k) and $3000 would be taxable to you personally in the current year.   While it might be better tax planning to own the note directly in your 401(k) it might be logistically impossible to do so. For example if your 401(k) is invested in your current employer’s plan and you are unable to roll it over into a self-directed plan, most employer sponsored IRA plans will not let you self-direct your IRA into notes and real estate, but they may let you take out a loan against your own 401(k) and pay yourself interest.  You would also create cashflow inside your 401(k) but depending on your personal financial situation you might prefer to have that cashflow outside of your 401(k).

Here’s a potentially better tax plan to create cashflow by investing in real estate with your 401(k) funds.  Let’s say you borrowed $50,000 from your 401(k) and purchased a $250,000 rental house with 80% financing and 20% down.  
Let’s say the rental house was a 6 CAP rate
($250,000 purchase price x 6 CAP rate = $15,000 Net Operating Income)
and you borrowed 80% of the money from the bank at 5%
($200,000 bank loan x 5% bank interest rate = $10,000 interest expense to bank)
and you pay back your 401(k) loan at 4% interest
($50,000 401(k) loan x 4% interest = $2,000 interest expense to 401(k))
Your gross real estate profit from rental activities would be $3,000
$15,000 NOI – $10,000 interest to bank – $2,000 interest to 401(k)  = $3,000 profit
However, this $3,000 profit is before we add in the tax loss from depreciation. Assuming a $250,000 rental property is $30,000 land and $220,000 structure and we depreciate the structure over 27.5 years we get an $8,000 tax loss from depreciation.
$3,000 profit less $8,000 in depreciation results in a $5,000 tax loss
***Check with your tax advisor about all income tax related issues.  Nothing on this website should be considered tax advice.***
So let’s recap this strategy to create cashflow…
EXAMPLE 1:  By borrowing $50,000 from your 401(k) and purchasing a note you create cashflow and profit inside and outside of your 401(k).  You would be creating tax deferral on the funds going into the 401(k) but you would have a taxable event in the current year on the profit that is in excess of the interest charged by your 401(k).  Talk with your 401(k) plan administrator and tax advisor to see if you have control over the interest rate charged to yourself by your 401(k) and also confirm with your plan administrator that the interest you pay to your 401(k) accrues to your benefit rather than to the benefit of the plan administrator.
EXAMPLE 2:  By borrowing $50,000 from your 401(k) and purchasing a $250,000 rental property you create cashflow outside of your 401(k) and tax deferred interest income inside of your 401(k) as well as a “phantom loss” on your personal tax return in the current year.   This “phantom loss” may or may not be able to offset other income you’ve earned depending on your personal tax situation.  Although the property is showing a paper loss (aka phantom loss) the property itself is profitable because you borrowed all of the money at an interest rate lower than the earning rate of the property.  Investing in real estate at a CAP rate higher than the cost of borrowing is called positive arbitrage and this is a key way to create cashflow using the Hassle-Free Cashflow Investing philosophy.   CAVEAT:  even though the property in this example is profitable and creating a phantom loss (which are both good things) it could result in negative cashflow because the amortization on the bank loan in addition to the shorter term amortization on the loan to your 401(k). Remember, not all profitable investments create cashflow that is positive and not all negative cashflow investments are unprofitable.  

If you would like help formulating your personal investment strategy or if you would like to learn about current Hassle-Free Cashflow investment opportunities please give me a call at 866-931-9149 ext 1 or schedule our phone call using this link to my calendar.
To your success!
David Campbell 

Real Estate Investing Strategist

Office: (866) 931-9149 Ext. 1

Cell: (707) 373-9966
create cashflow

Investing in Real Estate & Notes: 8 Hidden Capital Sources

Investing in Real Estate and Cashflow Producing Notes Using These Eight Hidden Sources of Capital
by Professional Real Estate Investor David Campbell

It is amazing how fast time goes.  2014 marks my fifteenth year investing in real estate and my tenth year as a real estate developer and syndicator.  Long time readers of my blog will know that I started investing in real estate while I was a high school band director with no business training and no net worth.  Over the past 15 years investing in real estate I’ve been fortunate to have had more real estate wins than losses (losses are an inevitable part of investing in real estate) and I am grateful for the amazing mentors and life experiences that have helped me get to where I am today.    Growing a successful real estate investment, brokerage, and development company out of humble beginnings has taught me a lot of lessons that I would like to share with you.

You can find many of those lessons reading my blog and free eBooks and enjoying the free video training at:

Here is a question I get asked all the time: “How did you become so successful investing in real estate when you started with no money?” What the asker is usually thinking is: “How do I become successful investing in real estate with a limited amount money?”  Whether you have $100 to invest or $100 million to invest, everyone’s personal financial resources are limited. Don’t feel intimidated by investing in real estate just because you don’t have a large bank account.   A great mentor once told me “Never let lack of capital get in your way of doing a good deal.  If the deal is good and you know how to tell the story of a good deal someone will fund it.”   As an innovating investor I took those words of encouragement one step further and looked for creative ways to fund my real estate growth.   Below are a handful of creative ideas to help you improve your wealth and passive income investing in real estate regardless of how much capital you are currently starting with.   

Disclaimer: Ideas can be powerful tools. Please remember in the hands of an untrained user, any tool can also be dangerous.  Please digest these ideas with a air of caution and if you decide to implement any of these strategies I encourage you to reach out to an experienced financial mentor to discuss your plans.  A good mentor may help you identify pitfalls you may not have thought of.  For example, some of the ideas listed below are legitimate strategies when working with private financing and commercial lenders, but these creative financing techniques may not work or worse could get you into legal trouble when working with conventional “Fannie Mae” style residential lenders. I am not a tax advisor or a legal advisor; check with your team of professionals before committing to any financial decisions!

Hidden Capital Source #1: Self-directed IRA – If you are self-employed or have IRA funds saved from when you worked at a previous employer, you can roll those funds into a self-directed IRA and use those funds for investing in real estate and notes.  If you earn $1 and put it into a tax deferred IRA you will have $1 to invest.  If you are in a 40% tax bracket and don’t defer the tax, you earn $1 and have $0.60 to invest. That means you need a 67% profit just to break even ($0.60 x 167% = $1)!   If you would like to learn more about self-directed IRA investing here are some great free training videos for you:

Hidden Capital Source #2: 401(k) loan –  If you have a 401(k) plan you may be able to borrow against your 401(k) to create a pool of cash to invest for investing in real estate. (Check with your plan administrator and tax advisor to make sure this would work for you!)  If you use the proceeds of your 401(k) loan for investing in real estate you may be able to pay interest to your 401(k) that is tax-deferred income to your 401(k) (A GOOD THING) and take a present day interest expense tax deduction on your personal tax return (A GOOD THING).   Let’s say you borrowed $50,000 from your 401(k) for investing in real estate and then paid 4% interest per year to your 401(k), your 401(k) would be earning a 4% return ($2000), tax deferred, while you would have a $2000 deduction on your personal return. Let’s say you then invested the $50,000 from your 401(k) into a note and trust deed that paid 10% ($5000 profit per year). You would have $5000 of interest income less $2000 of interest expense (to your 401(k) which means $2000 of your note income would be tax deferred as earnings to your 401(k) and $3000 would be taxable to you personally in the current year.   While it might be better tax planning to own the note directly in your 401(k) it might be logistically impossible to do so. For example if your 401(k) is invested in your current employer’s plan and you are unable to roll it over into a self-directed plan, most employer sponsored IRA plans will not let you self-direct your IRA into notes and real estate, but they may let you take out a loan against your own 401(k) and pay yourself interest.  

Here’s a potentially better tax plan for investing in real estate with your 401(k) funds.  Let’s say you borrowed $50,000 from your 401(k) and purchased a $250,000 rental house with 80% financing and 20% down.   Let’s say the rental house was a 6 CAP rate

($250,000 purchase price x 6 CAP rate = $15,000 Net Operating Income)

and you borrowed 80% of the money from the bank at 5%

($200,000 bank loan x 5% bank interest rate = $10,000 interest expense to bank)

and you pay back your 401(k) loan at 4% interest

($50,000 401(k) loan x 4% interest = $2,000 interest expense to 401(k))

Your gross real estate profit from rental activities would be $3,000

$15,000 NOI – $10,000 interest to bank – $2,000 interest to 401(k)  = $3,000 profit

However, this $3,000 profit is before we add in the tax loss from depreciation. Assuming a $250,000 rental property is $30,000 land and $220,000 structure and we depreciate the structure over 27.5 years we get an $8,000 tax loss from depreciation.

$3,000 profit less $8,000 in depreciation results in a $5,000 tax loss

***Check with your tax advisor about all income tax related issues.  Nothing on this website should be considered tax advice.***

So let’s recap this strategy…

EXAMPLE 1:  By borrowing $50,000 from your 401(k) and purchasing a note you create profit and positive cashflow inside and outside of your 401(k).  You would be creating tax deferral on the funds going into the 401(k) but you would have a taxable event in the current year on the profit that is in excess of the interest charged by your 401(k).  Talk with your 401(k) plan administrator and tax advisor to see if you have control over the interest rate charged to yourself by your 401(k) and also confirm with your plan administrator that the interest you pay to your 401(k) accrues to your benefit rather than to the benefit of the plan administrator.

EXAMPLE 2:  By borrowing $50,000 from your 401(k) and purchasing a $250,000 rental property you are creating tax deferred interest income and cashflow inside of your 401(k) as well as a “phantom loss” on your personal tax return in the current year.   This “phantom loss” may or may not be able to offset other income you’ve earned depending on your personal tax situation.  Although the property is showing a paper loss (aka phantom loss) the property itself is profitable because you borrowed all of the money at an interest rate lower than the earning rate of the property.  Investing in real estate at a CAP rate higher than the cost of borrowing is called positive arbitrage and this is a key component of the Hassle-Free Cashflow Investing philosophy.   CAVEAT:  even though the property in this example is profitable and creating a phantom loss (which are both good things) it could result in negative cashflow because the amortization on the bank loan in addition to the shorter term amortization on the loan to your 401(k). Remember, not all profitable investments are positive cashflow and not all negative cashflow investments are bad. 
Hidden Capital Source #3: Cash value life insurance.   I got the downpayment for my first rental property by taking a loan against a cash value life insurance policy my dad purchased for me when I was a kid.  You can learn more about investing in real estate using cash value / permanent life insurance and the “infinite banking concept” by watching this great video webinar with myself and Patrick Donohoe from Paradigm Life.

Hidden Capital Source #4: Deploying existing real estate equity owned by you or your friend.   This is a potentially obvious investment strategy that I am going to put a creative twist on for you.  Investing in real estate or notes using a cash out mortgage or line of credit against real estate  you already own can have very powerful results and can often improve your cashflow and LOWER your risk.  Here’s how: My client owned a primary residence valued at $500,000 and had a $300,000 first mortgage and $200,000 of equity.  The client refinanced the property with a new $400,000 first mortgage and pulled out $100,000 of investment capital.   His net worth was the same before and after the refinance; he just moved half of his equity into cash.  He then took the cash and purchased two $50,000 notes totaling $100,000, secured by $140,000 worth of real estate.   The client borrowed the money from his primary residence at 4% and invested it into notes paying 10%.  

$100,000 borrowed capital x 4% = $4,000 interest expense
$100,000 invested capital x 10%  = $10,000 interest income
$10,000 interest income – $4,000 interest expense = $6,000 annual profit

On a simplistic basis, we can see this was a profitable move because the fixed cost of funds was lower than the fixed earning rate. Let’s look a little deeper at the cashflow on this deal.

The $100,000 of extra mortgage expense at 4% on a 30 year fully amortized loan is a cashflow outgo of $477/month.

The $100,000 investment notes at 10% interest on a 15 year fully amortized loan is a cashflow income of $1,075/ month.

$1,075 cash in less $477 cash out = $598 positive cashflow

(Albeit, not all of the $598 is profit because we are dealing with principal and interest payments using two different amortization schedules (expense is 30 year and the income is 15 year).

The above is a great example of how being a borrower and using the concept of positive arbitrage can improve cashflow. The investor client is happy because he improved his cashflow position by $598 per month simply by signing his name a few times, but he is also happy because this situation LOWERED his risk. Here’s how:

When your monthly cashflow improves, your risk goes down because you have more liquidity to service your debts and build up cash reserves.

When the investor moved $100,000 of equity from his home into first position debt secured by other real estate, he moved the asset from higher risk “equity” to lower risk “senior debt”. Let me go deeper into this concept.  If the investor loses his job or credit in the future, he would be unable to tap the equity in his home without selling his primary residence.  However, by moving the equity from his home into first position liens on other property, he has the peace of mind that if he ever loses his job and wants to tap the equity in his home, he can always liquidate the notes for cash.  

The investor has also insulated his assets from the potential of real estate price declines.   If the investor had not moved his equity from his primary residence and real estate prices decline 40%, his $500,000 property would be worth $300,000, less the $300,000 of original debt, so his net equity would have gone from $200,000 to $0.   If he sold his house at this point in the market, he would have zero cash from the sale and he certainly wouldn’t be able to refinance any equity out of her home because there would be no equity.

By moving his equity into first position notes, his liquidity is more insulated from loss.  His $500,000 property declines to $300,000. Less $400,000 of debt, that means he has a $100,000 negative equity in his primary residence but he doesn’t have to sell his primary residence until the market recovers. Remember, when investing in real estate the value of a property only matters when you are selling or refinancing. The main concern the investor is insulating against is not a change in profitability but a change in access to liquidity.  Even if the notes go bad (always a risk), the investor will end up owning the underlying real estate. Ideally, the foreclosed houses would make great rental properties and would produce more rental income than what he was originally receiving in interest income from the previous owner.  However, if he decided to sell the foreclosed real estate, even if that real estate had gone down in value, it would not have declined to zero as the equity in his home did.  Moving your at risk “junior” equity into positively arbitraged “senior” notes while you have the equity and credit available to you would be the lesser of two evils in the event of large price declines.   

Here is another risk mitigating bonus for my investor client:   The investor owned a home in a high priced state and was concerned that the state’s economy and home prices might be fragile and unaffordable in the future.  He moved his at risk “junior” equity from his high priced state into “senior debt” secured by entry level real estate in Dallas, Texas, which is a more vibrant and diverse economy.   The investor felt that moving the equity out of his primary residence into a senior debt allowed him to (1) improve his immediate cashflow, (2) allow him to have access to this equity in the future regardless of his employment or credit position, (3) gave him options for liquidity in the future even if there are massive price declines, and (4) it gave his investments geographic diversity by moving a portion of her equity to Texas.   

Hidden Capital Source #5: Cash advance credit cards –   Here is a practical application on the idea of positive arbitrage that has merit but comes with some powerful caveats.  I have a client with the ability to borrow from his credit cards at a teaser rate of 0% for 12 months.   The client borrowed $10,000 from his credit card for 18 months and invested in a $10,000 note and deed of trust paying 10% that had a due date in 12 months.  The client borrowed the money at 0% and invested at 10% which generated a 10% yield spread.  

$10,000 trust deed x 10% interest rate – $10,000 credit card loan x 0% teaser rate = $1,000 profit

The client used the $1,000 interest income generated from this “arbitrage play” to pay down some of his longer term student loan debt.   It’s another example of borrowing for profit.  There is a risk that the credit card teaser rate would expire and reset to 18% before the note and trust deed were paid off so the investor made sure that if the note and deed of trust were not paid by the 12 month due date the note would have a default interest rate of 18%, which is the same as his credit card interest rate.   A big consideration for this type of arbitrage play is that your FICO score will be negatively impacted for the period of time your credit cards are drawn more than 50% of their available credit line.  However, when you pay off the credit card at the end of the borrowing period your FICO should improve.  You probably don’t want to use this strategy if you are about to apply for financing on a new real estate purchase.  And while this strategy could work well in investing in shorter term notes, you probably don’t want to use this strategy for investing in real estate as a long term investment unless you are confident you have another way to repay the credit card before the interest rate increases.

Hidden Capital Source #6: Barter your services or personal property – I once had one of our company’s vendors express interest in investing in real estate by purchasing a home built by my home building company.  The vendor could qualify for the loan but didn’t have the down payment.   We signed a seven year service contract with the vendor and paid the vendor for all seven years in advance. The vendor gave us a slight discount for pre-paying for his service.   The vendor then used the lump sum of cash we paid to him as the downpayment on a property we built and sold to him.   This was a win for the vendor because he got a seven year contract out of us when we previously had a month to month relationship and the vendor got to purchase a house he could not previous afford to because he didn’t have the down payment.  This was a win for our home building company because the profit on the sale of the house exceeded the amount we advanced to the vendor and we got the added bonus of a slight discount on a vendor’s services we were going to purchase anyway.   In the past, I’ve offered to accept vehicles or musical instruments or jewelry or land as the downpayment on houses.  If you’re looking investing in real estate or a trust deed and you have personal property or land that you’d like to use as your downpayment, give me a call.  I would love to work with you.  Often times I have taken my real estate equity or real estate broker commission in a promissory note or co-ownership in a property.  If you would like help  investing in real estate or an income producing note and you want a broker to co-invest their commission with you give me a call at 866-931-9149 x1 and we’ll see what we can put together.

Hidden Capital Source #7: Investment partners / syndication – When I find a good investment larger than what I can purchase with my own capital I go to my investor clients to form a partnership or real estate syndication.   Investing in real estate using partners can be a very complex subject but it is something I have gained a lot of experience with.  Here is a great video with myself and real estate attorney Jeff Lerman teaching a free one-hour course called “Partnering for Profit”

Hidden Capital Source #8: the seller’s bank –  Here is a great strategy for investing in real estate that works especially well with commercial properties:  On multiple occasions, I have met commercial real estate sellers who owe slightly more money on their property than it is worth as a cash sale.  A great investing formula is to get the property in contract with the seller for the best price you can (usually what they owe on the property) and then go to the seller’s bank and say, “Mr. Banker, you currently have a loan on such and such property for $1m and the property is really only worth $975,000.  I know you typically require a 25% downpayment on commercial real estate, but I am only interested in buying this property (for more than its worth) if you will give me special financing terms to buy this property.   I would like to reduce your loan from $975,000 to $900,000 and I will give you a personal guarantee that is worth more than the seller’s personal guarantee.  Will you do this?”  Usually the bank will say no.  However, you can explain to the banker that if the seller pursues a cash sale it will probably result in a short sale for the bank.  If the bank will cooperate with you by offering a higher than normal LTV loan you will lower the bank’s debt / risk position in the property by slightly paying down the existing loan, provide superior management to the asset, and provide a superior personal guarantee on the loan.   It doesn’t happen often, but I have been successful acquiring high LTV property using this strategy.  There are an infinite number of variations on this strategy, but the key points to remember are: how do you make the situation into a win for a bank who has a problem (loan overexposure and risk), a win for the seller (who has a loan/property they think will be a short sale), and a win for the buyer (who is willing to slightly overpay for a property to get superior financing terms from the seller’s bank).  

In addition to these hidden sources of capital for investing in real estate and cashflow producing notes, I encourage you to also watch this free video series where we discuss your “Eight Essential Resources” and how to use them to produce real estate profits:
If you would like help formulating your personal investment strategy or if you would like to learn about current Hassle-Free Cashflow investment opportunities please give me a call at 866-931-9149 ext 1 or schedule our phone call using this link to my calendar.

To your success!

David Campbell
Real Estate Investing Strategist
Office: (866) 931-9149 Ext. 1
Cell: (707) 373-9966

investing in real estate for cashflow

Keyword:  investing in real estate

David Campbell’s 26 Tips For Efficiency and Success in Business

David Campbell’s 26 Tips For Efficiency and Success in Business
Although I’m a professional real estate investor / developer, I wrote these efficiency tips in a very broad sense so you’ll get some juicy tidbits from this article regardless of what your business is.  If you are a busy person looking to become more efficient this article is for you. I’d love your feedback on these tips so if you have an efficiency tip of your own please leave it in the comments below or send me an email
Professional Real Estate Investor David Campbell’s
26 Tips For Efficiency and Success in Business

1) Use (free app) to create action items and “how to” lists.  Share lists with your colleagues who can update data in real time from their smart phones.

2) Use (inexpensive app) to coordinate meeting times with other people.   
3) Google Calendar (free app) synced with your smart phone to schedule your day before it happens.
4) Google Docs (free app) for file storage and file sharing with your team and customers.

5) Pre-screen email on SmartPhone during downtime on the train or waiting in lines and then respond when sitting at a desktop.

6) Delegate tasks that take your emotional tokens, especially those that are repeatable. But don’t delegate tasks that only you can do or that would require more time to delegate than if you had done them yourself.  

7) Organize your email box using folders with retrieval categories.

8) Schedule the ending time for appointments.

9) Calendar time to complete your to do list.
10) If you have something to say, don’t tell one person at a time; share your message with a group of people.
11) Schedule time to socialize and rest.
12) Make your rest time restful.
13) Be accessible but out of reach by creating small barriers to protect your time.
14) Return phone calls using a hands free headset while walking for health or commuting
15) Articulate what success and accountability looks like to you.
16) Let your professional team earn their fee – don’t try to do everything yourself even if you can.
17) Create and follow systems for accounting and document retrieval using file name taxonomy.
18) Don’t let the urgent get in the way of the important.
19) Start your day with your list of most important things to do (this is not usually responding to all email).
20) Close your door to distractions.
21) Open your mail over the recycle bin or, even better, hire someone else open and sort it for you.
22) When your brain is fuzzy: STOP working, drink water, eat a snack, and get your heart rate up before going back to work
23) Keep other people’s dirty feet out of your head.
24) Maintain positive peer groups and avoid negative peer groups.
25) Work for passive income streams rather than paychecks.
26) Stay with a task until it is done. Minimize mental multi-tasking which results in fewer transitions between projects.
Hopefully at least one of those tips will bring more efficiency to your business.  If you have a great tip for efficiency in business, please send me an email or share it on our Facebook page:

If you are looking to efficiently grow your passive income through Hassle-Free Cashflow real estate investments and income producing notes, please schedule a phone call with professional investor David Campbell by using this link to his calendar.
Best regards,

David Campbell
Real Estate Investing Strategist
Office: (866) 931-9149 Ext. 1


How To Predict Real Estate Prices

Want to know how to predict real estate prices ?  

Every investor wants to know how to predict real estate prices and the process is not as mysterious as it may appear

While I focus on investing for cash flow, loan amortization, and tax benefits, I also appreciate the warm and fuzzy feeling you get as a investor when your real estate values climb!  So, what are the things I look for when figuring out how to predict real estate prices?
Prices are a result of supply, demand, AND capacity to pay. 

Let’s look at these factors one at a time:

Demand for real estate is driven by population growth which is fueled by job growth.  In resort and retirement communities, you might see high demand and price growth even when the local job market is stagnant because the money to fund real estate purchases in resort areas was earned somewhere else and imported.

Real estate supply is restricted by (1) availability of land, (2) geographic boundaries such as water and mountains, (3) political boundaries such as permit fees, restricted density policies, and (4) economic boundaries such as availability of development capital and the ability to build and sell new properties at a profit. 

No matter how desirable or limited in supply something is, the price of the thing will be dictated by how many people can afford to buy it.  Affluent communities have more expensive restaurants than the poor communities.  Although the desire for food and supply of food to both of these neighborhoods might be the same, the prices in these two neighborhoods can be wildly different based on capacity to pay.  For example a can of Coke could be $1 in a poor neighborhood and $3 in an affluent neighborhood.   The main thing driving price differences in this illustration is capacity to pay.

Last week,my five year old son and I made blueberry muffins together.  When they were done he proudly exclaimed,  “Come buy blueberry muffins! Only THIRTY DOLLARS each!!!”   I asked him why his muffins were so expensive. Without hesitating he said, “Because people around here have a lot of money!”   Even at five years old, he’s paying attention to his dad’s lessons on economics!

As a real estate investor, I am attracted to affordable housing markets because it means the price of housing has the ability to increase in price.  Just because something is affordable doesn’t mean it will go up in price, it just means it can go up in price.   For prices to rise, the other variables of supply and demand must also be working in your favor.  However, if something is unaffordable for the majority of people who want to buy it, that’s a pretty strong indicator that the price could be in a bubble and may soon come down to more affordable levels.  

The ratio between median income and median home price is an effective way to gauge the affordability of housing in a particular market. 

Median Home Price / Median Income = Affordability Ratio

Using data from Q3 2013, the San Francisco – Oakland MSA has a median home price of $705,000 and a median income of $76,300. That means the median home price is 9.2 times higher than the median income; it would require 9.2 years of median income to buy a median priced house.  In terms of a monthly housing payment (Principal, Interest, Taxes, Insurance, and HOA dues), a median home in the San Francisco-Oakland MSA requires ~70% of the median income.  That’s not sustainable.  Either income must go up or housing prices must come down. I would bet on the former.
In Rockford, Illinois, the median home price is $88,900 and the median income is $51,500 which means the median home price is 1.7 times higher than the median income.  To put it in other terms, residents of Rockford use a mere 13% of their household income for housing.   WOW, that’s affordable!

Lenders don’t know how to predict real estate prices, but they know how to predict what borrowers are likely to pay and which are not.  Lenders know that when you use a lower percentage of your income for housing, their loans are less likely to go into default.  For example, FHA requires its borrowers to use no more than 31% of their gross income for housing and no more than 43% of their income for total debt service including housing and other loans.  It seems pretty crazy for someone in California to use 70% of their income for housing!

I’ve traveled to both San Francisco and Rockford and I can tell you without hesitation there is more demand and less supply of housing in San Francisco, CA than Rockford, IL. 

If you want to know how to predict real estate prices, there is a great equalizer in this supply and demand equation.  CAPACITY TO PAY.  Someone earning the median income and living on their parents’ couch in Rockford can save up all their pennies for 1.7 years and pay cash for a median level home in Rockford. Now, I’m not saying run out and buy real estate in Rockford because it’s amazingly affordable. (Remember, if you want to know how to predict real estate prices you also need the combination of supply and demand to create upward price movement.) However, I am saying San Francisco-Oakland prices are back into bubble territory and are poised for a downward price correction.  If you’re thinking of buying a home in the San Francisco Bay Area because you think home prices will continue to go up, just ask yourself “Who can afford to pay more than 70% of their gross income to buy this house?”  That’s right: NO ONE!

A housing price to income ratio less than 3 is very affordable, from 3 to 4 is moderately affordable, 4 to 5 is moderately unaffordable, and over 5 is severely unaffordable.  Here’s an example of these ratios based on a $100,000 house whose PITI is $7500/year and using variable median incomes to illustrate my point.

 how to predict real estate prices

If the median home price is more than five times the median income, those buyers will be required to use too much of their income for housing and will not qualify for mortgages.  This affordability ratio can be comfortably higher in resort and second home areas because the income is imported from outside the metro where the property is located.  However, if you are looking for rental property in a typical metro, properties with affordability ratios over 5 are overvalued based on the measure of capacity to pay.

One of the things I notice on this list is that the major metros in Texas rank remarkably well in terms of affordability:   Austin 3.7,  San Antonio 3.3, Houston 3.3, Dallas-Fort Worth 3.1  This healthy price to income affordability ratio is one of the things driving employers to bring jobs and people to Texas.  The population of the DFW metro is booming and that is why I am focused on building affordable new homes and owning affordable rental properties in that metro.  Let me know if you’d like to add some affordable Texas real estate to your portfolio as I would be happy to help.


If you would like to improve your odds knowing how to predict real estate prices, look for these three indicators of success: increasing demand (jobs), limited supply, and an affordability ratio below 5.  Click this link if you want to use these criteria to see how to predict real estate prices in Dallas Texas.

 To your success,

David Campbell – professional investor / founder of Hassle-Free Cashflow Investing

866-931-9149 ext 1


All rights reserved.  This article “How To Predict Real Estate Prices” may not be reprinted without permission.

Converting Your Primary Residence to a Rental Property

Converting Your Primary Residence to a Rental Property

By: Renee Daggett, Enrolled Agent

Sometimes there are economic reasons why people consider converting your primary residence to a rental property.  Maybe they are not able to sell the home.  Or, their family has been downsized due to kids leaving or a divorce.  Or, maybe health or financial reasons will motivate this change.

First, you have to determine whether the home is a rental for profit, a vacation rental or a rental not engaged in for profit.

A rental is considered “not for profit” when rented at less than Fair Rental Value, possible to a family member.  In these cases, income is reported as “other income” on line 21 of the Form 1040.  Expenses are allowed, but limited to rental income collected and claimed on Schedule A, under miscellaneous deductions, subject to 2% AGI.

The term vacation rental refers to the taxpayer’s personal use of the property.  Days that the house is rented at less than the fair rental value count as personal use days.  If a taxpayer has no personal use, the property is treated as a rental. All income and expenses are reported on Schedule E.

If the property is rented for 14 days or less, there is a minimal use exception.  The rental income is not reported and all interest and property taxes are deducted on Schedule A.

If the property is rented more than the greater of 14 days or 10% of the number of days rented at fair rental value, the rental income is reported on Schedule E.  The mortgage interest and property taxes are allocated between Schedule E and Schedule A based on the number of days rented.  For example, if Joe rented his home for 91 days and used it personally for 30 days, the mortgage interest would be 91/365 = 24.93% on Schedule E and the balance of interest on Schedule A.  For operational expenses, the percentage on Schedule E would be 91/121 (91 + 30).  Operational expenses related to personal use are not deductible.

When converting your primary residence to a rental property you will need to determine the basis for depreciating the rental, if for profit.  To do this, first establish the adjusted basis.  This is the original cost plus improvements minus any insurance reimbursements or tax credits.  Then, establish the fair market value at the time the home was placed in service for rent.  This can be done by comparable sales, appraisal or try  Then, when you compare the adjusted basis with the FMV, you always take the lower number to use for depreciation.

As with any rental, there are loss limitations of $25,000 for single and married filing joint taxpayers.  And, if your income is over $100,000 you may not get all the losses.  If your income is over $150,000, your losses will be suspended and you will be able to use them either when you have rental profits or you sell the rental property.

When you sell a property that was your personal residence, you have to use the adjusted basis, if there is a gain or the fair market value basis if there is a loss on the property.  Also, look back on the last 5 years of the rental.  If the house was used for at least two out of the last five years as a principal residence, then the taxpayer can use the Section 121 exclusion to exclude up to $250,000 of gain on the sale ($500,000 of gain for married filing jointly).  If you wait too long to sell the property so that the time you used it as a primary home was more than 5 years, you will not be able to exclude the gain.  However, you cannot exclude the part of the gain equal to the depreciation claimed while renting the house.

In contrast, if you convert a vacation or rental property to a principal residence the amount of section 121 gain that can be excluded on sale must be adjusted for the time you did not use it as a primary home.  This applies to use of the home in 2009 or later. Exceptions apply to military and foreign service.

To calculate the amount of the gain not eligible for the exclusion, you have to calculate the gain times the number of days of nonqualified use divided by the number of days owned.

Recordkeeping of dates will be key!

The decision of converting your primary residence to a rental property should not be made in haste.  As you can see, there are many details and responsibilities that go along with the conversion.


converting your primary residence to a rental property Renee Daggett, Enrolled Agent 

Admin Books, Inc.

125 Lindo Lane, Morgan Hill, CA 95037

P: 408.782.9640 | F: 888.459.1117



All rights reserved.  The article Converting Your Primary Residence To A Rental Property was printed at the permission of the author. 

Real Estate Investor Lessons From The US Postage Stamp

Eleven Real Estate Investor Lessons You Can Learn From The US Postage Stamp
by professional investor David Campbell

real estate investor lessons from the US postage stampOn Monday January 26th, 2014 the price of a first class stamp in the US will be going up 6.5%, from $0.46 to $0.49.  No one is really surprised by this, so where’s the lesson and how can it help you be a more successful real estate investor?

Lesson 1: Utility – The utility of a stamp on Monday will be exactly the same as the utility of a stamp today.   The VALUE or UTILITY of the stamp is the benefits that the stamp provides.  Regardless of the price, the UTILITY of the stamp will remain the same;   what really happened is that the utility or value of your CURRENCY went down.  On Monday, it will take more dollars to buy the same amount of stamp utility you can buy today.

In real estate investor terms, the utility of a single family home is its ability to provide shelter. Over a thirty year period the utility of a four bedroom two bath home stays exactly the same.  On day one, the house will provide the same amount of shelter it will in thirty years.    

Lesson 2: It’s Not a Secret – The post office announced this price change on September 25, 2013.   They gave you plenty of warning that the utility of your currency was about to go down by 6.5%.  That’s a lot!!!   

The Federal Reserve Bank, which has a substantial control over the utility of your currency (meaning the amount of stuff your dollar will buy), also announced in a press release on December 18, 2013  that   “Inflation has been running below the Committee’s longer-run objective… of 2 percent.”  You can insert your political opinion here regarding whether inflation is really running below 2% or not, but the point is nobody is keeping inflation a secret.  The post office told you the utility of their service was going to stay the same but prices were going up.  The Federal Reserve is giving you fair warning that the utility of your currency is going down by (at least) 2% a year if they can do anything about it.

As a real estate investor, inflation makes it relatively easy and predictable to find properties that will make me money over the long term.  I want to find a property that will preserve its utility over a long period of time, will be a hassle-free ownership experience for me, and cashflow along the way especially when inflation pushes up the rent.  In my world as a real estate investor that means owning new or like new properties with professional management, in landlord friendly states, and purchased with creative deal structures that allow me to cashflow with as little money down as possible.

Lesson 3: Leverage – Let’s say you go out on Sunday and buy 10,000  postage stamps using all of the cash you have on hand.  You’d be out of pocket $4,600.   You could theoretically sell those stamps in less than 30 days to your short sighted friends and family who didn’t know the price of stamps were going up to $0.49 or who didn’t prepare and take action like you did.   Maybe you sell them at a slight discounted price of $0.48 so you have a value proposition to offer.  Your 1,000 stamps would sell for $4,800 in 30 days –  a 4% profit in 30 days or a 48% annualized yield.    That’s a pretty astounding return for such a simple investment, but at the end of the day you only made $200; not a lot of profit for the effort involved.   Let’s take this exercise a step further… So you have an AMEX card with a $23,000 limit on it and you have $4600 in cash so you go buy 60,000 postage stamps at $0.46 for a total investment of $27,600 (OK they probably don’t have that many in stock, but just hang in there for the lesson).   You have $4600 of your own cash invested and $23,000 of credit invested.  That’s A LOT of stamps, so let’s say it takes you 60 days to sell all of those stamps and you wind up paying 18% annualized interest to AMEX for the privilege of borrowing the money for 2 months.   At the end of 2 months your profit loss would look like this:    60,000 stamps sold at a discounted price of $0.48 = $28,800 less your initial investment of $27,600 less credit card interest of $690 equals a total profit of $510 divided by your initial cash investment of $4600 annualized equals a 67% annualized rate of return.   The unleveraged version of this investment produced a 48% annualized yield and the leveraged version produced a 67% annualized yield.   The takeaway is that the leveraged version of this deal produced both a larger gross profit and a larger annualized yield even when the interest rate was high because the investment yield was higher than the borrowing cost.  I love real estate because there is an amazing amount of leverage available to a real estate investor.  What other asset class can you borrow 75-95% of the purchase price and still produce positive cashflow after debt service?

Lesson 4: Scalability – In the above example, you made $510 of profit and there was virtually no risk involved.   So you say “WOW, that is a genius business model, David.  I’m ready to hop in the car  and go buy stamps right now!  I actually have $100,000 of investment capital available so let me run out and buy 217,391 stamps and I’ll make $20,000 on this flip.”  The problem with this massive postage stamp flip is scalability.  If you have a two cent profit per item, you need to sell A LOT of items to make any money and find a big enough market to absorb the item you are selling.  One the best parts about being a real estate investor is that it is very scalable.   If you make a 5% profit on a million dollar property, we’re talking about $50,000 and that is serious money!  Even better, if you bought your million dollar property with only 5% down and your property goes up in price by 5% you’ve actually doubled your money.   

Lesson 5: Historical Perspective –  The price of a postage stamp was $0.10 when I was born in 1975, $0.29 when I graduated from high school in 1993, $0.32 when I graduated college in 1997,  $0.42 when my first son was born in 2009, $0.46 today and $0.49 on Monday.  The day I was born in 1975, someone could have purchased a decent home in the US for 400,000 ten cent postage stamps (or $40,000).  Purchasing this same amount of “house utility” still costs 400,000 postage stamps in 2014, but the price of a stamp moved from $0.10 to $0.49 and the price of a decent home moved from $40,000 to $196,000.  Even though the price of the home and the stamp have increased almost 500% in the past 38 years, the utility or value of both of these things remained the same.

Lesson 6: Making Money With Debt –  Imagine buying a $40,000 house in 1975 using 100% financing and interest only payments.  That means $40,000 loan with no principal payments would have the same loan balance in 2014 as it did in 1975.  On the date you purchased the home the loan was worth 400,000 postage stamps and the home was also worth 400,000 postage stamps.   If you sold this house in 2014, you would be able to sell it for … ta da! 400,000 postage stamps.  The way you make money with this formula is that it only takes 61,224 postage stamps to repay the $40,000 mortgage in 2014 and you would receive the equivalent of 238,776 postage stamps as your profit.  You started with zero postage stamps invested (remember 100% financing) and 38 years later you have 238,776 postage stamps, or $156,000, to show for your profit.  Remember, the utility or value of the house did not change;he utility of the currency decreased as the government printed more of it.  As the currency devalues, borrowers of good debt are making a profit.  As a real estate investor, how much good debt would you like to control?

Lesson 7: What This Means For You As A Real Estate Investor –  I’ll keep it as simple as I can:  Buy real estate whose intrinsic value will remain the same or decrease very little over time.   Finance that real estate with as much positively leveraged debt as you can while still maintaining neutral or positive cashflow.   Wait two or three decades and the value of our currency and the value of the debt will both decrease in value.   Pay off your debt with devalued currency and you will have lots of postage stamps… ahem… I mean dollars left over to show for your foresight.  (Positive leverage means the CAP rate of the asset you purchased is higher than the interest rate used to purchase that asset. Positive leverage is an essential fundamental of the Hassle-Free Cashflow  real estate investor philosophy.)

Lesson 8: If It’s That Simple Why Doesn’t Everyone Do It? – The price of postage stamps is going up 6.5% tomorrow.  How many people are running to the store today to stock up on stamps?   Not many, and that’s exactly my point.   People know currency devaluation is happening and the majority of people aren’t doing anything to prepare for it. The post office and the Federal Reserve are both telling you your currency will continue to devalue.  Now that you know what’s happening, what are you doing to not only protect yourself from inflation but to profit from it?

Lesson 9:  Banks Love Inflation Too –  Banks don’t lend their own money.  They lend other people’s money.  They collect deposits and then leverage those deposits by borrowing from other banks.  They pay less than 2% interest on those deposits and loans and then they lend it out to other people for 4% or higher.  The bank makes a spread on other people’s money.  The bank doesn’t care if the currency is devaluing because the currency doesn’t belong to the bank; it belongs to their depositors.   As the currency devalues, the prices of the assets securing the bank’s loans go up and the loan to value improves thus making the bank’s job easier to foreclose if needed.  If you are a real estate investor paying attention, you should be asking “How do I get to be the bank?”

Lesson 10: The Big Take Aways – I hope you enjoy my real estate investor newsletter and the tons and tons of free real estate investor education and investment opportunities you can find on my blog. Our team at can help you buy positive cashflow rental houses with as little as a 5% downpayment using our proprietary real estate investor financing programs.  We can help you BE THE BANK.  If you could borrow money at 5% and invest it at 6% or more, how much money would you like to borrow?  We can help you acquire brand new rental houses in the hottest rental market in the country (Dallas – Fort Worth Texas) that will cashflow with as little as 5% down.  The more positively leveraged money you borrow the more property you control.  The more property and good debt you control, the happier you will be when currency devaluation occurs.   Remember, your property doesn’t have to go up in value to make a fortune; it only has to go up in price as a result of currency devaluation.

Lesson 11: How To Be The Bank – AMAZING MONEY MAKING BONUS -What if I were willing to loan you $60,000 at 5% interest and then borrow $60,000 back from you at 10% interest using my loan to you as collateral?  You’d make a 5% profit ($3,000 a year) on the money I loaned to you and you’d have absolutely zero risk because if I defaulted on my loan to you, you would just tear up the note that you owe to me and we’d be even.  That seems crazy so why would anyone in their right mind do this?   There’s a perfectly logical reason, but if you want to find out that reason you’ll have to schedule a brief phone phone call with me!   There are always a few strings attached so let’s get them out in the open so we aren’t wasting each other’s time on a phone call talking about a real estate investor opportunity you aren’t qualified for.  To qualify for this insanely simple and safe program you need to meet the following criteria:

(1) have a minimum credit score of 680 if you are a US citizen or an equivalent amount of strong credit if you are not a US citizen,

(2) you have a healthy job history and debt to income ratio which allows you to qualify for a conventional loan (if you have 10+ financed properties we can still help you),
(3) you can show a conventional lender a minimum of $40,000 in cash reserves ($80,000 if you are not a US citizen),
(4) you have a long term real estate investor mindset.

If you fit the financial criteria above and you’d like to make $250 a month or more as a passive private lender and real estate investor using my money you need to give me a call. Why would anyone lend you money at 5% and borrow it back at 10%.  That seems like a terrible business decision?!?!?   I guarantee when you get on a short phone call with me it will make sense very quickly.   I can only accommodate about twenty investors into this risk-free, sounds-too-good-to-be-true-but-isn’t, private lending and real estate investor program so if you are interested, please schedule a call with me ASAP using this link to my calendar:   

Real Estate Investor Opportunities –  Our team wears a lot of hats so we can provide diverse investment opportunities for our clients:  We have brand new homes for sale in Dallas-Fort Worth Texas that create positive cashflow with as little as 5% down.    

We buy and sell notes to help our income investors achieve cashflow. We currently have notes available for sale!  Our supply of notes is relatively small and they usually sell very quickly to our inner core of clients who pick up the phone and make their investment objectives clear to us.    

We aggregate real estate investor capital into private placement syndications (aka group investments) to buy net leased commercial properties.   

We are a hard money lender and buyer of income producing notes.  If you have quality notes for sale, give me  a call.   

If you are a real estate investor looking to increase your wealth and cashflow as a hassle-free cashflow real estate investor, try scheduling a 30 minute phone call with me to see if there is an opportunity for us to work together.    
Best regards,
David Campbell
Real Estate Investing Strategist
Founder of Hassle-Free Cashflow Investing
Office: (866) 931-9149 Ext. 1
Cell: (707) 373-9966

You may schedule a investor strategy consultation with professional real estate investor David Campbell by using this link to his online calendar.

Keyword:  real estate investor

2014 Economic Predictions For Real Estate Investors

2014 Economic Predictions For Real Estate Investors

by professional investor David Campbell 

A year ago I published my economic predictions for real estate investors in 2013 on my BLOG.  It’s fun to go back in time and see how well my crystal ball worked.  Click here to read my 2013 real estate investor economic predictions and with the benefit of hindsight see if you agree my predictions were pretty spot on.

My 2014 Economic Predictions are short and sweet:

“More Federal stimulus ahead causing malinvestment in localized asset bubbles”.  I’ll say that again but in English this time. “People do stupid things with easy money and there is a lot of easy money floating around. So, when you get some of this easy money don’t be stupid with it!”
The current level of prosperity in the US is being fueled by the “wealth effect” which is fueled by massive government stimulus propping up asset prices (mostly the stock market and to a much lesser degree the housing market as well).  The prosperity feels real from the standpoint that people are spending and earning money again.  However, this is a game of musical chairs and you won’t want to be the last one standing.  Economic stimulus through the printing press is like taking a drug that makes you feel great until the buzz wears off; then you have an economic hang-over worse than your original problem. I believe we are at the end of the economic hang-over created by the last boom and bust cycle and we are just ramping up the euphoric feeling of the current QE infinity inflationary cycle.
The following are my specific 2014 Economic Predictions for real estate investors :

Very few people are bold enough to make specific predictions because the more specific you are the easier it is to be wrong  (and most people hate being wrong). Take these predictions with a grain of salt.  Forward this email to your friends and use it as a conversation starter.  You can use the dialogue to make up your own predictions for the year.  I really want to hear your feedback about these 2014 Economic Predictions on my Facebook page. After you are done reading, come find me online

David Campbell’s 2014 Economic Predictions for Real Estate Investors 

Real estate rents, wages, food, interest rates and energy prices will rise moderately in 2014.
Gold will trade $1150 – $1450 and silver will trade $18.50 – $23.00.  
I predict 30 year owner occupied mortgage interest rates to go up to five percent by July and hover in the low fives through the end of the year.  Commercial mortgage rates will be lower than residential mortgage rates because commercial banks will remain flooded with cash and have no one to lend it to.   Residential interest rates will creep up as the government withdraws stimulus from that part of the market in an effort to moderate housing price growth.
Wall Street funds that bought large portfolios of foreclosed homes will start to liquidate their single family holdings as a result of increasing adjustable rate mortgages (*many Wall Street investment funds bought houses with short term adjustable rate loans and those loans are either coming due or are looking at the probability of rising interest rates).   These Wall Street funds never intended to be permanent landlords (and they aren’t very good at it). With home prices up this is a good time for these funds to start cleaning up their portfolios by liquidating their most troublesome and most price inflated properties.   The release of this inventory will put a downward price pressure in those markets who had the highest rates of appreciation from the trough.  I would be very cautious about buying into Las Vegas, Pheonix, San Francisco Bay and Southern California and if I already had a sizable profit tied to a property in one of those markets I would consider exchanging out of it.
I remain a huge fan of the Dallas-Fort Worth metro.  I do have a personal bias for telling you about that market because I am building and selling rental houses in Dallas and Fort Worth, but there are a lot of other really smart people who are very bullish on Texas. Here’s a great video by the North Texas Economic Commission why the DFW economy is at the very beginning of a long term upwardly trending market.
I am also intrigued by Charlotte, Denver, Atlanta, Miami, Tampa, Washington DC metro, Portland, and Seattle but not nearly as much as I like Texas.  I predict all of the major cities and small oil towns in Texas will have 6-10% housing price and rent increases along with lower rates of vacancy (6.5% vacancy or less).
Bit coin will get more media attention, but its pricing will become even MORE volatile such that only the blackmarket economy will really accept it for payment.  Governments around the world will find a way to tax bitcoin.
Stock prices will become extremely volatile in 2014.  Watch for heart wrenching price swings of 10-15% up and down in a given month.  Stock traders will make record profits in 2014.   Stock investors will end the year sideways or down.  If you aren’t sure about the difference between an investor and trader, here’s a great article for you.
The unemployment rate is much worse than the published numbers because many people who have expired off of unemployment benefits and have stopped looking for work or they have moved onto the rolls of Federal disability.  States pay for unemployment benefits but the Fed pays for disability so cash strapped states are moving people off unemployment benefits and onto Federal disability benefits as a way of balancing their budgets.   Those on disability are not counted as unemployed.   Expect to see a jobless economic recovery.  The gap between the affluent and the poor will widen because the affluent make money by owning assets which are inflating in price while the poor make money selling their time but there will be fewer and fewer jobs for unskilled workers as a result of increased environmental protection legislation and higher minimum wage laws.  “The best way to help the poor is to not be one of them.” – Laing Hancock
2014 will be a prosperous year for many.  Be careful not to sucked into speculative investments because fiat currency will be causing malinvestment everywhere.  If you are looking for a fast read on how fiat currency manipulation leads to bad decision making I highly recommend reading “The Clipper Ship Strategy” and “Whatever Happened to Penny Candy” by Richard Maybury.
A mentor of mine once said, “There is no such thing as a good or bad economy”  You can only be skilled or unskilled in your interaction with the economy.”
If you’d like to discover more ways how you can use your eight essential resources to get good at this economy, be sure to take advantage of the offer of a no-cost personal investment strategy consultation with me – David Campbell.  It’s a powerful way to start off your year.
Best regards

David Campbell

Real Estate Investing Strategist
Founder of Hassle-Free Cashflow Investing
Office: (866) 931-9149 Ext. 1

 2014 economic predictions for real estate investors by David Campbell

FREE Investor Strategy Consultation – Valued at $300
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David Campbell is the Founder of Hassle-Free Cashflow Investing – an organization that helps real estate investors and business owners acquire wealth through turnkey real estate investments. David is the CEO of a investment real estate brokerage, development, and property management company with well over $100 million of real estate transactional experience. His professional background includes real estate development, apartments, condo-conversion, retail, and office.

You can schedule an investor strategy consultation with professional investor David using the below calendar link to book your FREE phone appointment.
Your call with David is to help you gain clarity on your financial goals. Nothing will be promoted for sale on the call. 


Keyword: 2014 Economic Predictions for real estate investors

What is an accredited investor?

What is an accredited investor?

There are some investment opportunities such as  securities that are unregistered with the Securities and Exchange Commission (a US government agency), certain types of Private Placement Investments, and some passive limited partnerships that are available only to an accredited investor.  To become an accredited investor there is no class to take, no registration process, no test, and no ID card.  You just need a minimum level of net worth or income to qualify as an accredited investor. 

Under the Securities Act of 1933, a company that offers or sells its securities must register the securities with the SEC or find an exemption from the registration requirements.  Registration of an investment with the Securities and Exchange Commission (SEC) can be very time consuming and insanely expensive.  Fortunately, the SEC provides a vehicle for investment sponsors to choose exemption from registration with the SEC under certain strict guidelines. The Act provides companies with a number of exemptions listed in Regulation D. For some of the registration exemptions of Regulation D of the Act, a company may sell its securities to what are known as “accredited investors” and potential to a limited number of non-accredited investors. If you want to know what is an accredited investor, here is the definition from the US Securities and Exchange Commission Website:

The federal securities laws define the term accredited investor in Rule 501 of Regulation D as:

  •     a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person is an accredited investor; or
  •     a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year is an accredited investor; or
  •     a bank, insurance company, registered investment company, business development company, or small business investment company; or
  •     an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million; or
  •     a charitable organization, corporation, or partnership with assets exceeding $5 million; or
  •     a director, executive officer, or general partner of the company selling the securities; or
  •     a business in which all the equity owners are accredited investor (s); or
  •     a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

If you are an Accredited Investor or Non – Accredited Investor looking for passive investment opportunities, feel free to schedule an appointment with our team to see if you are qualified to participate in future group investment *syndication* opportunities

what is an accredited investor

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Real Estate Investing Advice For New Investors

Want Help With Your Real Estate Investing?

There are so many ways to make money in real estate investing it can be challenging to know where to start and where to focus.  To make matters worse, the rules of real estate investing are constantly changing based on market conditions, geography and most importantly …. YOU as an investor are constantly changing.  I frequently say “There is no such thing as a good or bad investment. There are only investments that are appropriate or inappropriate for your situation and timing.”   If you’d like to know where you are going and what to invest in, it is essential to have a clearly defined personal investment philosophy.

To develop or redevelop your personal investment strategy, here are a few key questions to ask yourself:

Write down which of these Eight Essential Resources you have an abundance of and which resources you are lacking.

  1. Cash
  2. Cashflow
  3. Equity
  4. Credit / Credibility
  5. Time
  6. Talent
  7. Relationships
  8. Control over deal flow

Click HERE if you’d like to learn more about how to use your eight essential resources in your real estate investing.

Are you investing for capital gains or for cashflow?

How much cashflow do you realistically need to “get out of the rat race”?

Are you investing for pride of ownership, philanthropy or another intrinsic motivation other than profit?

How active do you plan to be in the management of your investments?  hands on? totally passive? managing the managers?

How close do you need the properties to be to where you live?  Within an hour? Within a day’s drive? Within the US? Within any English speaking country?

How much capital are you willing to invest in real estate in total?

How much capital are you willing to invest in each specific deal?

What type of real estate do you want to own?  houses? retail? apartments? self-storage? mobile homes? condos? farm land? etc.

How long are you willing to wait to go from cash to asset and back to cash?

What types of investments do you consider risky for your situation? What types of investments do you consider safe for your situation? Is it really true?

What kinds of investments would keep you awake at night? (CLUE- make sure you don’t buy this kind.)

Click HERE if you’d like to read about the difference in personal investment philosophy between an investor and a trader.

If you’d like help refining your personal investment philosophy you may CLICK THIS LINK to schedule a no-cost personalized investment strategy consultation with with professional investor David Campbell.  David became a multi-millionaire while working as a high school band director and investing in real estate part-time.  David has a heart for teaching new and part time investors how to create financial independence through the vehicle of real estate investing. 

real estate investingKeyword: real estate investing

Inflation rate and things your stock broker won’t talk about

Inflation rate and other things your stock broker won’t talk about

It was all over the radio today (5/3/13) “stock market hit a new high because of a better than expected jobs report”. That is talking head BS. The market goes up when there are more buyers than sellers and NO ONE knows what is driving the buy decision. The vast majority of the market is professionally traded by institutional investors and banks who are not trading based on jobs reports. If the market is at an all time high, why aren’t you selling?  There is going to be a lot of profit taking in the very near future which means more sellers than buyers. If you have a buy and hold approach to stocks you are going to get creamed!!! That is an antiquated investment idea that your mutual fund sales person wants you to believe in so they can afford new shoes for their kids.

Here’s the short answer on my philosophy: ownership of publicly traded stocks should be for the wealthy and for sophisticated traders who have the time, team, risk tolerance, and intellectual resources to go from cash to asset and back to cash as the market indicates. The financial services industry through an obscene amount of marketing and the passing of ERISA laws have conned middle class Americans into believing that the stock market is an appropriate place for their money. The addition of mutual funds seems like a good way to make a risky investment for the wealthy sanitized for consumption by average Americans except for this hugely important point…. the value of mutual funds is not based on the performance of the underlying stocks owned by the mutual fund; the value of the mutual fund is based on what other investors and traders are willing to pay for shares of the mutual fund. Therefore mutual fund pricing works basically the same as a stock and thus is no safer or more appropriate for an unsophisticated investor than direct ownership of stocks. 

I’m not saying that you can’t make money buying stocks. I’m saying that a buy and hold strategy ABSOLUTELY WILL NOT WORK because their has been a fundamental shift in our economy and here it is… America *and other nations* are purchasing their own sovereign debt and thereby controlling the price of their bond market. Treasury rates are at an all time low (see chart below) because of artificial interference in the bond market (*due to bonds being purchased by the same governments that issue them).

Ultra conservative investors who should be in dividend paying assets like bonds cannot buy bonds because the bond yield is a fraction of the Fed’s target inflation rate thus bond purchasers are accepting a guaranteed loss of purchasing power.  Bond investors are being forced into at risk equities (stocks) in an attempt to create yield and preserve purchasing power.  Today’s 10 year US Treasury rate is 1.62% while the Fed is targeting a 2% inflation rate *source Wikipedia and the meeting minutes of the January 2012 US Federal Open Market Committee (aka the Federal Reserve).   To put this into as simple language as possible…  if you buy a $100 US Treasury and hold it ten years until maturity you will have LOST $4.70 of purchasing power. 

Inflation rate and things your stock broker won't talk about

Here is where anyone can predict the future for what happens next.

Bond rates will either go up or stay the same (they can’t go much lower than they are now).  If bond rates stay where they are, more and more low risk money that should be in the bond market will move to the stock market which will further drive up prices. As money leaves the bond market to chase yields in the stock market, governments will have to buy even more of their sovereign debt which ultimately results in a higher inflation rate.

(Side Note: governments buy their own debt using newly created money.  Inflation is a reflection of money supply times velocity.  Velocity is the rate at which money changes hands in the economy.   New money results in inflation unless velocity goes down.  We haven’t seen a high inflation rate recently because velocity is at an all time low at the same time money creation is at an all time high.) 

As the inflation rate increases from increased money supply or increased velocity, the effective nominal gains experienced in the stock market will get wiped out through inflation and taxes on paper profits. 

(Another side note using the above chart as an analogy:  If you buy a stock for $100 and ten years later sell it for $121.90 and the price of a widget inflated at exactly the same rate from $100 to $121.90, have you preserved your purchasing power?  NO!!!  Because you will owe taxes on the $21.90 profit before you can buy your widget.  $21.90 profit less 25% tax = $16.43   Thus your $100 purchasing power is still eroded even if you can invest the same as the inflation rate.  One obvious solution is investing in inflation friendly assets like real estate.)

If *or when* bond rates go up, existing bond holders will experience losses on the face value of their bonds (bond prices move inversely with bond rates). As bond rates trend up, the discount purchase rate on bonds will increase to compensate for the perceived rising interest rate risk (bond holders become losers again).  Let me say that again in English…. if you want to sell your US Treasury Bond before the maturity date, you’ll have to sell it for LESS than what you paid for it if the prevailing bond rate goes up (which it probably will).  An investor will pay less for a bond paying 1.6% interest than they will pay for a bond paying 2% interest.  If you buy a $100 bond today with a note rate of 1.6% and tomorrow the prevailing note rate is 2%, you’d have to sell your $100 bond for less than $100 to attract a buyer.

When bond yields become attractive enough for low risk investors (aka when you can buy US Treasuries that pay a rate of interest higher than the targeted inflation rate), there will be a massive transfer of wealth from the stock market to the bond market.  Remember, there is an incomprehensible amount of money currently in the stock market that doesn’t want to be there.   I’m not talking about mom & pop investors…. I’m talking about banks, pension funds, and huge family trusts. When higher rates in the bond market begin to draw money away from the stock markets there will be some massive price turbulence in the stock market (mutual funds included).  NO ONE  knows whether the stock market will be higher or lower in 20 years than it is today. What I can guarantee is that  (1) we will have more price volatility than we’ve ever seen (2) smart traders will make a fortune because they love volatility (remember a trader gets into and out of positions, an investor holds for passive income – CLICK HERE for my article on the difference between being an investor and a trader), (3)  investors who are following a buy and hold, dollar cost average, diversification strategy are going to have no control over the value of their portfolio and they will be taking HUGE risks without the correlating potential for upside.

Stock investing rules have changed.

If you want to summarize the problem in a nutshell… the average American doesn’t know the rules of stock investing have forever changed, yet they feel safe owning stocks and mutual funds because their television tells them “It is safe to buy mutual funds because everyone else does it.” Mutual fund sales people are taught to sell products to middle class Americans who are not traders and they don’t have the skill or ability to actively and intelligently move from cash to asset to cash.  Few mutual fund sales people and even fewer of their customers understand basic economics and how a targeted annual inflation rate of 2-3% combined with sovereign debt purchasing driving bond yields to zero has removed “risk free yield” from the investing equation which has been the historical basis for all investment decisions to date.  A target inflation rate combined with sovereign debt purchases have fundamentally changed the rules of the investing game and your mutual fund salesperson either doesn’t know or doesn’t care to tell you.  

The solution:  Buy income producing assets like positive cashflow real estate.   Start or invest in closely held companies that generate cashflow and whose value is based on real things like the physical assets they own and the profits they create.

david campbell blog photoIf you’d like to schedule a no cost investment strategy consultation with Professional Investor David Campbell to see how you can increase your investment yields while lowering your investment risk, CLICK HERE.





keyword: inflation rate

Top Real Estate Blogs to Follow in 2013

Top Real Estate Blogs to Follow in 2013?

Hassle-Free Cashflow Investing was named one of the Top Real Estate Blogs to Follow in 2013.  We ranked #55.  The internet is a big place so #55 is not too shabby. And, we’re in good company.  Check out this list of the top real estate blogs and while you’re here be sure to check out our BLOG.


top real estate blogs


An infographic by the team at CouponAudit

Keyword: Top Real Estate Blogs

Investment Philosophy Can Make You Richer

Investment Philosophy Can Make You Richer

I got to know my next door neighbor Darren this weekend.   Darren has made and lost millions of dollars in his career as a stock market investor and builder of software companies.  For someone who recently lost several million dollars, Darren’s outlook on life is remarkably optimistic.  Darren and I went out for dinner to talk investment philosophy and our conversation went  something like this:

David:     “WOW! You lost your entire net worth of $3,000,000, and you’re still smiling every day.  What’s your secret?”

Darren:      “It is much easier to rebuild a fortune than to build it for the very first time.  It’s basic muscle memory.  If you remember what being rich feels like the universe will attract wealth to you.”

David:      “What do you mean?”

Darren:  “It’s like this.  If a person is given the choice between two things and one of the choices is concrete and the other is vague, a person will usually make the concrete choice even if it is the logically inferior choice.”  
As our waitress brought us our meal I asked her, “Would you rather have french fries or anything?”   Our waitress repeated my question aloud, then paused to think.  Amazingly she said, “I would rather have french fries.”  

Fries are tangible; anything is vague.  Logically, if you could choose between french fries and a diamond ring, you wouldn’t pick french fries.  However, the possibility of anything was so intangible it did not register as a choice.   If you’ve never been rich, wealth is an abstract concept.  If you’ve been rich once, wealth is a concrete concept you can hold onto and choose.  It becomes like a beacon drawing you towards it.   You’re heard the expression, “you never forget how to ride a bicycle”.  Well that expression has actually been scientifically proven.

investment philosophySo how do you become rich if you’ve never been rich in the first place?  As a first generation multi-millionaire I’m happy to share some of the most parts of my investment philosophy:

investment philosophy #1 – Think wealthy. Rich thoughts are the precursor to a rich bank account.

investment philosophy #2 – If you want to become wealthy, surround yourself with people that think wealthy.  It is important to emphasize the word THINK, because there are people who THINK poor and people who THINK rich – how they think is more important than what their bank account says.  

investment philosophy #3 – There is no such thing as being a “self-made millionaire”.  Everyone has a team that is either pushing them forward or pulling them away from success.  If you are poor or middle class, I am 90% confident your current team is also poor or middle class and they are pulling you back.   Unsuccessful teams don’t want their teammates to become successful, because as soon as you’re successful you’ll quit their team and join a successful one.   

investment philosophy #4 – Listen to success oriented audio programs in your car.  Protect yourself from the consumption of news media and TV programs whose content is negative.  Some of my favorite authors and speakers are Brian Tracy, Zig Ziglar, Jim Rohn, Dennis Waitley, Robert Kiyosaki, Robert Helms, Jeffrey Gitomer, Vic Johnson, Les Brown,  Tom Hopkins, Stephen Covey and David Campbell (if I don’t like my own stuff, who will).

investment philosophy #5 –  Give people concrete choices that create win-win opportunities for both parties.  Have you ever asked your partner “Where do you want to go for dinner?” and they respond “I dunno, where do you want to go?”   If you’re looking for an action oriented outcome, focusing your question to two concrete choices “Would you like to go out for Steak or Sushi?” will give you an answer that gives you direction.  Try asking your children  “Would you like one scoop or vegetables or two?”   “Would you like to go to bed now or in five minutes?” You’ll get the behavioral response from your kids you are looking for with less hassle.

With this investment philosophy in mind,  I have a closing question for you.   Would you like to increase your passive income now or ten years from now?

Open your mind to the field of possibilities and wealth will find you.  I have a success oriented team that will help you develop your investment philosophy and achieve powerful wealth results limited only by your own thinking.  If you have a willingness to increase your wealth I can help.   

Please give me a call.

David Campbell
Real Estate Broker / Developer / Professional Investor
 (866) 931-9149 Ext. 1


keyword: investment philosophy

investment property manager interviewing techniques

Investment property manager Jason Cox and professional real estate investor David Campbell share their thoughts in part four of this four part interview series.

David: When people are interviewing a residential investment property manager, it’s kind of like interviewing for a business partner or a date. You’re deciding, on the first date, which is your interview, is this someone you want to jump into a long-term committed relationship with? You’re not quite getting married, but you’re deciding if it’s a good idea to move into together and start sharing toothbrushes. It’s that kind of a personal relationship. What are some of the key questions that would be important for people to ask an investment property manager?

investment property manager real estateJason: You definitely want to meet the broker. That is the person that is ultimately responsible for the property management company and how they perform. Being a member of National Association of Residential Property Managers (NARPM) is important. That will tell you how legitimate the company is. Being on the MLS—it’s not inexpensive, but that’s going to let you know that your property is being marketed in the most effective way possible, at least in our area in Texas.

David: If the broker is not a member of the MLS, then your property is not going to be exposed on the MLS, and in some areas that’s a really big deal for rentals. If you go to, the only way to get a property there is to have it in the MLS. And that’s not cheap. So if your property manager doesn’t pay for that service, you’re not going to get that benefit.  So here are some great questions to ask your manager. These days technology is such an important part of the management experience. I would focus a lot of my questions around how the manager is implementing technology to make his job easier, which makes my job easier as well. Some of the key points to ask, how many units do you have under management, and what is the vacancy in their overall portfolio, and the types of units that make up their portfolio. I want my units to be consistent with the makeup of that investment property manager portfolio. For example, let’s say the manager says, “I’m very experienced, I have 150 units under management.” That’s enough to create a full-time income for an investment property manager. But what kinds of units are they? “Well, they’re all C-class ghetto properties.” I’ve got a brand-new luxury house on the other side of town. That’s a different type of customer service experience and vendor expectation. I want to make sure that I’m going to ask the manager leading questions, like “If you were going to buy a property in this area, what kind of property would you like to manage?” How many times have people asked that question?

Jason: You’re the only person that’s ever asked me that. But that’s a great question to ask your potential residential investment property manager.

David: The answer that comes out could be all over the map. They might say, “I really enjoy cleaning human hair out of toilets so give me the ugliest, dirtiest property possible.” Or they might say “I really like four-bedroom homes because families live there, and I like working with families because they tend to be longer term.” And as a investment property manager, there’s an interesting paradigm shift to break. Do you make more money spending a lot of time leasing a property and making 50-60% of the first month’s rent, or doing nothing, and getting 8-10% of the month’s rent?

Jason: Doing nothing and getting 8-10%.

David: Your investment property manager does a lot of work finding the right tenant for you, and once that tenant’s in the property, the manager’s goal is that the tenant pays their rent on time and they don’t call and ask for repairs.  Your manager basically does not do a whole lot and they get paid 8-10% of the rent. The reason you have the manager is because when your tenant does call, your manager puts in so much more work than what that 8-10% pays. Maybe you’ve got a $500/month rental, and the manager’s fee is $50/month, or 10%. You’re hoping that tenant doesn’t call, but when they do call, it’s probably going to take you 3 or 4 hours to fix that problem, and then you’re only making $12 or $15 an hour, and the property manager wants to make more than that, so they want to set you up for success, by getting that residual income for both of you. Talk about what your company does to ensure that your clients have a good management experience. What kinds of questions would you want people to ask you so you can show off what a good job you do?

Jason: We definitely want the proper expectations set up front so everyone understands what’s expected from each other. I would definitely want potential clients to ask me what steps we take to find their tenant and make sure that we’re doing everything possible to place a good tenant in that property. It’s very important to put tenants through a screening process, to look at their background and their income. Put them under a microscope. It’s your property manager’s job to treat your investment as if it were their own. That’s our policy, and that should be every property manager’s policy. If you start out with a tenant on the right foot, you’re more likely to be set up for success with that tenant. Nobody has a crystal ball, but there are things that you can do, or ask of your property manager, to put yourself in the best possible position for success with any particular tenant.

David: The questions we have on the slide seem like they should obvious but they aren’t. Not all residential investment property managers have after-hours emergency response. Not all managers have a privacy policy for your essential documents. Your property manager has your social security number, because they have to file a tax form for you, and they have tax-reporting obligations. They’ve also got your tenants’ personal information. They have copies of your keys. Do they have a good policy to separate the keys from the address that goes with those keys?  So if someone were to break into the property manager’s office and steal their box of keys would that thief have instant access to your property? There are a lot of best practices that go into property management, and I think that it’s the hardest job in real estate. I will look at investing heavier into a market when I find a good manager that I want to expand my relationship with. Unfortunately, not all property managers do a good job. Some property managers are unethical, and it’s really unfortunate that in business there are people who do it ethically and people who don’t. When you’re new at investing, it’s easy to be taken advantage of by your tenant and your property manager. Sometimes your property manager takes advantage of you ethically by not meeting your expectations. If the manager doesn’t know what your investment goals are, and you haven’t had a conversation about what your metrics of success are, sometimes the manager could very innocently think they’re helping, but simultaneously hurting. My A/C broke down, and my manager spent $100 fixing it, and that was good, but what I didn’t communicate to my manager was, “This A/C is on its last legs anyway. The next time it breaks down, I want you to replace it. Don’t patch it.” It was my error that I hadn’t communicated that to the manager. The manager’s error was not understanding what my objectives were with that property, not understanding what I wanted from that property and what my policy on expenses were. That was not necessarily an unethical situation, but it was a mismatch and a bad residential investment property management relationship. The manager didn’t do a bad job, but the relationship wasn’t working because we hadn’t gone through those questions and answers.

But sometimes, I’ve had a manager that was not doing a good job, just a terrible manager. These are big red flags that you need to get some help or dig into your manager to see what’s going on. Some ways that managers steal from you, they can give a rent credit to the tenant for fixing a repair, and then bill the owner for that same repair. It’s one bill and two payments, and people who are not good at accounting aren’t going to necessarily recognize that the rent was debited and there was an expense as well.

The manager can duplicate expenses on multiple months. Here’s a legitimate invoice for an expense in September, and then in November, here’s that same invoice again, taking it out of your rent for two different months. It could be that’s an innocent mistake, or it could be a way for a manager to steal money from you and you not knowing it. The manager could be collecting a management fee on a tenant’s security deposit. This has happened to me and I pitched a fit. Their accounting department saw revenue, and they put a management fee on that entire revenue, but it’s not all the same. The security deposit is not income, and there’s no management fee on that deposit because I have an obligation to pay it back to the tenant.

In my position as a real estate investment counselor, I get people telling me all the horror stories about investing. Not all investing has to be horrible. Some people have stamina for this, they just laugh. Some people, it affects them emotionally, and I steer them towards more commercial tenants or triple-net tenants, or real estate syndications, or having a partnership where one person deals with the money and the other deals with the management of the asset. I’ve heard stories where the manager collects rent and they tell the owner it’s vacant, or they fudge the move-out date. They moved out on the first, but the manager says they moved out a week earlier, and the manager gets to pocket that extra rent.

Here’s a really big one that is straight up illegal that a lot of brokers don’t actually know: co-mingling funds in a broker’s trust account. Your money that comes from the tenant, but it belongs to you, goes into the broker’s trust account. If the broker makes some money in his own portfolio, or he gets a commission, they’re not legally allowed to put those funds in the same bank account, because they’re mixing their personal funds with your funds. I would ask what their policy is on maintaining their broker trust account. If they just look at you glassy-eyed, that’s a clue they might not have the experience you want.

Sometimes a broker will collect the deposit at move-in, and then when the tenant moves out, the broker says to the owner, “You have the deposit, because we gave it to you when the tenant moved in, and now we’re going to deduct it from your rent.” That’s a sneaky one, because sometimes people forget, because the lease sometimes doesn’t say. The lease might say the deposit is $1000, but the lease doesn’t say who’s holding it. This is a sneaky one and sometimes it can be innocent and sometimes it can be malicious. You want to know very clearly who’s holding the deposit. I like when I see the security deposit on my management statements, on a monthly basis, just remind everyone whether the broker is holding the deposit on that tenant. And if the broker is balancing their trust account, then it’s going to be obvious who’s holding the deposit.

I just showed you the dishonest tricks that a residential investment property manager could use. Here are some red flags that those tricks are being used against you. Sometimes property managers bill owners for repairs that didn’t happen. If the manager’s using the same service company for every repair, that’s a red flag. The same company that does your HVAC should not also do plumbing, painting, carpeting, window repair, and landscaping. Those are different skills. You want an invoice from each of those companies. If you’re not getting those invoices, that’s a red flag. Your property manager should be giving you those invoices, or maybe having an online drop-box where they put those invoices so you can go look at them when you want.

If the income and expense statements are vague or illegible. If you don’t understand your income/expense statement, call your manager and have them explain it to you. If they can’t explain it to you, it’s a big red flag. Sometimes, when your property is vacant, you’re going to have utility and landscaping expenses. If you’ve got 30 days’ vacancy, and you never see the utility bill or the landscaping bill, that’s an interesting red flag because maybe your property isn’t really vacant. Maybe there’s a tenant paying rent there, and your manager’s just pocketing the rent, because if the tenant’s still in the property, the utility’s going to be in their name, and they’re going to be paying for the landscaping.

It’s a big red flag if you’re getting notices from neighbors, city, HOA, etc. Sometimes when I own a property, I’ll communicate with the neighbors and say, “I’m the property owner, here’s the business card for my manager. If you have a problem, call my manager. If you can’t reach my manager, I’ve written my number on the back of the card” as a courtesy to the neighbor so they feel empowered that if there’s a problem there’s someone they can talk to. Talk about best practices. Do you think that’s a good idea to be in communication with your neighbors or not?

Jason: I think that’s great. The neighbors, especially if they’re owners or if they have a mortgage, tend to feel higher up in the hierarchy, when in reality we’re all running from somebody unless you’ve completely paid for your house. They’re going to watch your property like a hawk if you give them that sense of empowerment. And they’re there 24/7. That is a great tool, having two or three neighbors watching that property at any given time and calling you. Sometimes it could be bothersome because you could get that nosy neighbor, but it’s better to have too much information than none at all.

David: For example, one time I had a water leak in one of my properties and the tenant was out of town, and the water was running down the street. And the neighbor called me, and said, “I just wanted to let you know there’s water coming out of your front door.” Thank you very much for calling! Then I could call my property manager, and say “The neighbor called me and let me know this is a problem,” and the manager went out and fixed the problem. That kind of eyes on the property can be very helpful.

Your investment property manager should be giving you before and after photos of the property. And if they tell me that it’s inconvenient for them to do so, they are not the right manager for me. It’s so easy today with smart phones for the manager to take their smart phone, take a picture and email or text it to me. It doesn’t have to be a big fancy presentation; it can literally be a text message with a photo of the property. I’ve been very impressed when a manager had a service person go take care of the HVAC at the property, the cooling condenser unit needed some servicing, and when they went into the property, they just took a few pictures, not of the air conditioner, but just of the general condition of the property. Then they provided those to me as the owner. That was really above and beyond service; that was really awesome. I got a look into my property just as a baseline.

You are entitled to have a signed copy of the lease agreement and any kind of renewals or extensions. If you don’t have those, I really encourage you to get them. In most states, the tenant signs the lease, and the property manager counter-signs. And that’s a scary thought, because your property manager has entered into a binding legal contract on your behalf as the owner. And I want to know what my residential investment property manager committed me to, because they literally committed me to do something, and that thing that they’ve committed me to is in the lease. I want a written management agreement and a copy of their lease template, because that spells out what the manager is authorized to do on my behalf.

The broker license thing is really interesting. In every state that I’m aware of, to manage real estate for other people for a fee, you need to have a real estate broker’s license—not just a salesperson’s license, not a real estate agent’s license, but a real estate broker’s license. And the difference between a broker and a nurse is like the difference between a doctor and a nurse. A nurse can practice medicine under the supervision of a doctor. But if the nurse wants to just open their own medical practice and start doing their own things, that’s not usually allowed, and it’s the same idea with a real estate license.

Whenever your tenants move in or out of the property, there’s an inspection form, or there should be, and your manager should be giving you a copy of it. I make sure that I keep my copy of that inspection report in case I need it in the future. I wish my manager, Jason, a very long and happy healthy life, but if for some reason he had an unexpected departure from planet earth, I want to know where all my documents are so I can transition smoothly to a new residential investment property manager.

When there are irregular distribution dates of your money, that means your manager doesn’t really have organizational procedures, they don’t know what they’re doing on certain days of the month or how to run their business. That’s a red flag to me, if one day I get my money on the 10th, the next it’s the 20th, the next it’s the 15th, the next it’s the 12th. It should be fairly regular when you get your money. If your tenants pay late, your manager should let you know. Usually an email is sufficient for me. “Hey, your tenant’s running late.” I want my manager to recognize that there’s a problem and that they’re on top.

Fair housing practices: this is such a big one. The laws change from state to state, and one of the reasons I really like investing in Texas, is Texas is a much more landlord-friendly state than California, where I live. California’s very landlord-unfriendly. How as a manager do you comply with fair housing in the state of Texas?

Jason: Here in Texas—it’s like this in other places as well—we cannot discriminate against race, religion, familial status, things like that. If we did, that could bring about liability not only to us but to our owners. We take continuing education just to stay up on the fair housing laws so that our owners don’t have to worry about that. It’s a very big deal and can potentially cause a lot of problems. Fair housing can come in and shut our entire company down, pull the broker’s license, and then everybody’s without a manager. Compliance with fair housing law is a huge deal.

David: Let me give you some very innocent examples of why fair housing is so tricky and why it’s so important to have a professional managing your property. I’m going to be the bad landlord/manager and you get to be the innocent tenant who’s out to sue me. “Jason, would you like to live here because it’s right next door to the Catholic church?” That’s a problem!  “Jason, are you going to be living here with your wife and kids?”

Jason: You can’t say that. That’s a no-no.

David: How about, “Oh, you’re going to love living here because you’re Hispanic and this is a really Hispanic neighborhood.”

Jason: You’re going to lose your company. Those are big no-nos.

David: Very innocently, you can violate fair housing and not know it. A residential investment property manager takes continuing education and they’re very hypersensitive to frame their words in such a way as to comply with fair housing.

Other signs that your investment property manager is not a good one, they stretch the truth when it doesn’t matter. If I said, “Hey, is my property rent-ready? Is it ready to go, is it marketed?” and if the manager says yes, and they really meant it’s going to be ready tomorrow, that’s a problem with me. I wouldn’t care if they said it’s going to be done today or it’s going to be done tomorrow, but if they tell me it’s done today, I expect it to be done today. I fired a manager because I said, “A week ago I asked you to remove some debris from the front yard, is it done?” and they said, “Yeah, it’s done.” And I said, “I’m standing in the yard right now and I see the debris that you were supposed to remove. Are you still going to tell me you’ve removed it?” And they said “Yes, I’ve removed it.” Well, I’m looking at the debris. Not that the debris was a problem, but it was an honesty problem, they couldn’t just say “I was about to get to it” or “I forgot.” Residential investment property managers aren’t perfect. Don’t expect your manager to be perfect. I just want them to have personal accountability when there’s an error. And if your manager never gives you bad news, that’s problematic.  Every property will eventually have bad news and you want your manager to be honest with you when it happens. 

Do’s and Don’ts of firing your property manager: the big one is find a new manager first!  You don’t want to fire your manager without having a plan for who is taking over.  Give your manager written notice that you’re leaving and check your management agreement to see how you handle that transition—sometimes there’s a fee for departing, sometimes there isn’t. Take responsibility that the person you’re firing is the person you hired, so you as an owner can’t put all the blame on the manager. It’s partly your fault for hiring a bad manager in the first place.

Things that you don’t want to do: don’t badmouth your old manager to your new manager, because your new manager’s going to think that you’re a pain to work with. One thing that you could do is to say, “One thing that really didn’t work in my last property management relationship was that my statement never came on the tenth of the month, and I’m looking for a manager who can deliver their payment and the statements on the tenth of the month. Is that something that you can do?” So in that context, I shared what I didn’t like about the old manager, but by spinning it into a positive saying, “I’ve got an expectation that I’d like you to meet.” Whatever you tell your tenant, your tenant’s going to tell your old manager and your new manager, so be mindful what you tell your tenant.

We’ve got four property management secrets: Be a good owner so that your manager will go the extra mile for you. Jason, I know you’d love to say that you treat all your owners exactly the same, but I’m guessing that’s impossible.

Jason: I would love to say that I don’t have favorites, but I do, and it’s because of how they treat me.

David: The cheapest brain surgeon, the cheapest residential investment property manager doesn’t save you money. When I’m looking for a manager, I want to make sure they are very good and that they are earning enough money that they’re going to take care of their property. And when they have to choose how to allocate their time, are they going to put time into my portfolio, or someone else’s portfolio? It comes down to how well do I treat them? Do I respect them? Do I treat them like a peer rather than a servant? A lot of people look at their property managers as servants because sometimes they do very hands-on work, and that’s a bad attitude towards your team member who is your number one asset. Treat your manager like gold and they’ll treat you well.

Whatever market you choose to buy a property in, make sure it has a lot of management choices. When I was a new investor, I bought a property in a very small town and there were only two property management firms. One of them I didn’t like. The second one I hired and had a conflict and I fired them, and then I was stuck. There were only two managers, and I didn’t like them both, and what do I do now? That’s one reason I gravitate toward larger towns. A town like Dallas-Fort Worth has thousands and thousands of quality property managers. Jason’s the best, but if for some reason we ever got into a disagreement, I’m sure that within a number of days I could find another super high quality manager. That keeps me honest and it keeps Jason honest. He’s going to do a great job for me because he knows I have several management choices.

I like to use residential investment property managers to help me find property to buy. Whenever I’m looking at a new property in Dallas, or when I’m going to try to develop something, I’ll send my manager the address and say, “What do you think of this property? Tell me what kind of rent you think you could get. Do you think this is a good property area that would attract a lot of tenants? Would you like to own this property?  Can you get me access to off-market deals?”

Jason: We have several property owners with our company. There’s a misconception that every investor is a bazillionaire, and they’re not, they’re normal Joes, most of them. Sometimes they get over their head in a property, and we had one particular client who is in that situation, and she reached out to me and said “Here’s my property. We have a tenant in it, and if I could just get what I owe on this property, I’d get rid of it.” So here we have a property that the owner’s willing to sell well below market. Those come along all the time, because our owners aren’t all wealthy people; they just made an investment that got the best of them.

David: Sometimes the problem isn’t the property, it’s the owner. I had one client who was telling me their property was such a problem. I said, “It’s positive cash flow every month, what’s the problem?” “Well, I lost my job, so I take all the rent money and I spend it to live on.” The problem isn’t the property, the problem is you! If you paid the mortgage, you’d have money left over. People make mistakes and the first person to know about it is usually the residential investment property manager. It’s a great secret: work with your property management to help you find and evaluate deals.

We’d like to point out some great features of our website,, we have turnkey and hassle-free cashflow investment opportunities and investor training ideas, all those things are free on our website, please check it out.

I hope you have a fantastic and prosperous investing experience, and if you set yourself up correctly, it can be hassle-free.

Here is a link to the video version of this investment property manager interview.

residential investment property manager secrets

Part Three of an interview with professional property manager Jason Cox and real estate investor David Campbell

When I was a new investor, and even now, I have very high expectations but want to make sure I’m being a reasonable owner. Share some of your thoughts about working with unreasonable property owners, and what makes them unreasonable.

Jason: Wanting your rent to be paid on the first of every month—it’s impossible, just through the dynamics of the transaction. The tenant has to mail their rent, or do an ACH transfer. There’s a timeline in there, and that’s why our goal is to get it to you by the tenth of every month. That allows for tenants to pay at different times, and for the different financial institutions or the postal service to get it to us, and for it to clear our bank. The rent paid directly to the owner would just be an accounting nightmare. There would be no way to track that.

David: Here’s why it would be a nightmare… my property manager’s job is to get the rent from the tenant, and if the tenant doesn’t pay, I want my property manager to notice, not me. And if the rent goes to me, I would have to call the manager, and say, “I didn’t get the rent from the tenant, go do something about it.” And what an extra unnecessary step that would be. So a lot of what makes an owner an unreasonable owner, is where the owner is stepping in to do parts of the residential investment property manager’s job for them. It’s like saying to a car mechanic, “I would like to hold the wrench and have you turn it.” That’s just cumbersome. Why not just let the mechanic do his job?  Some unreasonable things new investors come up with are from lack of experience, like “I want my property inspected every thirty days!” But what an annoyance to the tenant. It’s not that the property manager’s unwilling to look at the property. If every 30 days a stranger came into my home and looked around, I wouldn’t want to live there very long. Tenants want their privacy. The property manager’s job is to look for signs that maybe there is a need to look inside. Looking at the exteriors is a clue of how the inside looks. If the rent starts being slow, that’s a clue that there might be something going on in the property—maybe a loss of a job or something like that.  A lot of landlords want to meet every tenant, and I think that’s a terrible idea. I never want to know who my tenant is. It’s kind of a cold way to think about it, but my tenants are people, and my property is a business. It’s really tough to try to separate yourself. I’m a very compassionate person, and if I had a tenant call and say, “I lost my job, and my child passed away, and I really need more time paying the rent,” that’s just a terrible, terrible situation to be in, because as a human being, I would want to say “Of course! What a horrible situation, I would never want that, I can only imagine how terrible you feel, take your time.” But my job is not to provide welfare for this person. I can be empathic, but it isn’t my job to pay their bills and to be their source of personal income. And so, by separating myself from the humanness of who the tenant is, then the professional property manager gets to say, “I’m sorry, your problem is unfortunate, but I’m just a messenger, and my job is to enforce the lease. And we have an agreement, you pay the rent, or you move out. If you need some help moving, perhaps we can arrange to locate a property you can afford, or work out some kind of a payment plan.” By removing myself from that personal connection with the tenant, it allows you to 1) scale larger, and 2) make your investments hassle-free.   Tenants are the messy part of investing; it’s unfortunate that tenants have messy lives, and I just want to remove myself from their messy lives as much as possible.

Jason: Owners should never meet their tenants. That is absolutely what the residential investment property manager is for, is to take the human aspect out of the equation, as cold as that sounds. You cannot effectively run your business—synonymous with your property—if you throw the human equation in there and become sympathetic to whatever they throw at you. What’s sad is a lot of owners will get played, for lack of a better word. We’ve had tenants that I didn’t know you could have that many grandmothers pass away in one year. It’s just a bad plan for an owner to have direct contact with their tenant.

David: When I was a brand new investor and I was managing my own property, I had a particular tenant that went six months without paying their rent. It was my own fault; I just was slow to start the eviction process. And when we finally evicted that tenant, she had nicer furniture and newer clothes and newer everything than I did. And I thought, “This is crazy, I’ve been paying this woman’s housing for the past six months, and she’s got all of this nice stuff.” It’s key just to stick to the lease and then it’s a business agreement …. don’t make it personal.

The residential investment property manager is the most important person on my team. I like when I go to a new market to start my due diligence with the property manager. More important than the property itself is the person available to meet and greet my tenants, to help me avoid lawsuits, to help my properties stay in compliance with code. I own properties that I have not been to in five years, and the only person who’s been there is my manager. I’m comfortable with that because I keep on top of my managers and have good relationships with my managers. The manager’s job is to isolate the owner from hassle, to allow me economies of scale or leverage with my time. My job is to run my business, and my manager’s job is to manage my properties.

Jason: I couldn’t have said it better. That’s absolutely what we’re here for, is to take the load off of the owner, and do our job, so that owning property does become as hassle-free as possible.

Click here to read the rest of this interview.

What are the qualities of a good property manager?

Part 2 of an interview between professional investor David Campbell and professional property manager Jason Cox.

What are the qualities of a good property manager?  How do we quantify what a good property manager is? It’s easy to say I want a great manager, but what does that look like? Let’s ask professional property manager Jason Cox about some of the nuts and bolts of what you should expect from a good property manager.  

David:  When someone has a professional residential manager in place, how quickly should they expect to get their money from the rent?

Jason: Typically, They should expect it no later than the 10th of the month, provided they don’t have a crazy month with a holiday weekend at the very beginning.

David: So when we’re working with our residential investment property manager, if you know that I expect my money by the tenth, and it doesn’t come in by the 15th, am I going to be a happy customer?

Jason: No, you’re not.

David: So the idea is if Jason knows what I expect, he can deliver on that. If for some reason I was expecting to get my rent by the 5th of the month and Jason was happy that he got it to me by the 10th, there is a disconnect in our relationship, where I’m expecting something that he didn’t know and because he didn’t know he didn’t deliver on that expectation, and then that becomes a conflict.

So what we’ll be talking about today is adjusting your expectations of a good property manager, making sure that your property manager communicates with you on what they can reasonably provide. What is reasonable? How do you communicate with a new owner on what the metrics of success would look like?

Jason: I believe that you should sit down with each of your owners and go over how you run your business as a property manager. Once they have that information, it’s ultimately up to them, if they feel based on what you told them, whether you’re the right property manager for them.

David: So when I went to hire Jason as my property manager, I said “it’s important to me that I can read and understand your report. So before I make a decision to hire you, please send me your property management reports, so I can see what I’m going to get.” That created an expectation to Jason. He knows that I’m going to read what he sends me, and that it better be legible and in a way I can understand, otherwise he won’t keep my business.  I want my properties full 100% of the time. But that isn’t reasonable. So I build into my performance a vacancy loss assumption. Is it reasonable that my property would be rented at the market rate of occupancy? How would you figure out what the rental rate would be?

Jason: In order to figure out the market rental rate, we would run your property or run that particular area on multiple listing sites and see what the other properties within the past six months have rented for, comparing apples to apples. From that we would be able to determine what that property should rent for and how long it should take it to rent.

David: So the important part… I asked Jason, “How would you answer this question?” And he gave me his metrics of success. He told me how he would solve that answer, so at any time I can call him up and say, “Using the methodology that you explained, collecting and comparing market data, tell me if we are or are not achieving our metrics of success, which is hitting a certain occupancy rate.” So Jason and I created a checklist between him as my manager and me as the owner. These are the things that we can check off to see if Jason is doing a good job. This checklist is going to be different for you and your manager.  So when we’re setting our management relationship up for success, I believe the residential investment property manager’s job is to educate me as the owner on how my property can perform. Once the manager and I understand what success looks like, and we’ve quantified that, I want the manager to help me stay in touch with the market. Can you give us some thoughts on that?

Jason: Any time a  property is at the beginning stages, as we discussed before, it’s vacant, it’s just been turned over, we use the Multiple Listing Services (MLS) to determine what the best rate of rent should be, and then we put it on the market for that. But moving further down the line, when the tenant is up for renewal, you don’t want to just renew them at the same rate. A good manager is going to pull up the MLS again, or whatever they use in their area, and take another look at the market because a lot can change over the course of a year or a six-month lease. And then determine if a rent increase needs to be put in place.

David: Or potentially a rent decrease…  I would love it if rents always went up, but sometimes they don’t, for whatever the reason.  And so by being in touch with my manager, I can empower Jason to set the market rent. The place where a lot of investors get in trouble is they say, “My mortgage is $1000, so I need you to rent it for $1100.” You don’t even know what the property is like. The rent might be $800 or $1500. For the owner to base the rent on their need is false economy. The market sets the rent range. A good property manager can help you determine what that rent range should be.

Click here for part three of this interview.

Keyword: good property manager

Living Your Life by Design

Living Your Life by Design

By professional real estate investor David Campbell

Today we’re going to talk about a system for getting everything that you always wanted in life. I call it making your Star Board. So grab a piece of paper and you can do this very simple exercise with me.

Start by drawing a star in the center. This is you; you’re the star of your own life and you get to write your own script in life. So we’ll script out the things that you want in life or in a given year. We’re going to make points of light shooting out from this particular star. We’ve got five sections of our paper, and I’m going to give you the secret five F-words for life. It’s not that F-word you’re thinking about; it’s one that’s a lot more powerful.

So we’re going to write up here the five F-words. Fun is really important. Your fitness is very important. Down here, your finances are very important. Over here, you’ve got your faith, or we can call this your philanthropy. And over here you’ve got your family. And the important part of the five F’s is balance in your life. Each of these parts of your life has certain objectives and outcomes written in them that you’re looking for. As you start to dream and write about the different things that you want for your life, you’re going to see whether your life that you’re creating by design is in balance, or whether everything is heavy toward one area.

So for example, at the beginning of every year, I start out and I think of all the fun things that I might want to do this year. I’m going to take a vacation with my family to DisneyWorld, I’m going to take my son on a train ride. And so I start writing those over here, the things that I want to do.

And over here for fitness goals, I’m going to write things like I’m going to go on a walk every day.

Over here in finances, I can make a very specific business goal. I’m going to purchase this many houses in a year, and originate so many loans, and add this many commercial properties to my portfolio.

Down here is my faith and my philanthropy. I’m going to attend this specific charity event, or make a contribution to a specific charity, or do some kind of meditation every day to build my spiritual life, my faith and my philanthropy.

Over here in family, I set very specific and measurable objectives. I want to make sure that I do bedtime with my son every day. That’s an important thing.

So once you start building up your five-pointed star and build your star life, then you’ve got a to-do list for your whole year or your whole month or whatever period of life that you’re designing. And if you do your to-do list, you’ll have a well-balanced life, and you’ll have everything that you wanted in life by design.

Keys to Successful Residential Investment Property Management

Keys to Successful Residential Investment Property Management

Interview with professional real estate investor David Campbell and veteran property manager Jason Cox

The very important points we’re going to cover in this series of blog posts on residential investment property management are: the metrics of success for management—how do you know your manager is doing a good job?  We’re going to talk about why your residential investment property manager is the very number one most important person on your investing team. We’ll talk about what’s reasonable and not reasonable to expect your property manager to do for you. We’ll show you some warning signs that may be a clue that your property manager is not doing a great job for you. We’ll talk about how to interview for a property manager. And we’ll talk about what to do if for some reason you get into a property management relationship that didn’t work out and you need to fire your property manager, how do you handle that situation?  In this series of blog posts, we’ll give you four property management secrets to make you more money as an investor.

Residential Investment Property ManagementA little about myself, I am David Campbell, the founder of Hassle-Free Cash Flow Investing. I’m a real estate investor, developer, and broker.  Today I am interviewing Jason and Melinda Cox who are the owners and managers of Cox Premier Properties from Dallas, Texas. They do a great job managing residential investment property.  One of the big clues that a manager does a good job, or that they take their job seriously is that they are a member of the National Association of Residential Property Managers (NARPM). Cox Premier Properties is a member.

Here’s a really brief life cycle on how we make money as a residential investment property investor. You start with the property and you lease the property. Then your tenant goes to work and your tenant makes money. Your tenant pays you the money. Then you use some of that money to pay the expenses, like your taxes and your insurance, and you pay your bank, and then you get to keep the money that’s left over. That’s that part we like best.

When your tenant disappears, or stops paying, or loses their job, one of the parts of this life cycle is broken—unfortunately, as the landlord, your expenses and your mortgage keep going. So it’s really important that we figure out how to maintain this healthy life cycle of collecting money from rents which keeps the landlord happy.

One of the fundamental questions in keeping this lifecycle healthy is choosing the type of tenant that matches your goals.  What kind of tenant are you after? I have Fortune 500 companies as my tenants. I would love to get more federal government tenants.  I also have properties like the sloppy house you see here. The magic of being a landlord is that you get to guesstimate what your tenants will be by the property that you choose to buy. The reason that investing has such high returns, but you hear horror stories of people saying “Oh my goodness, I bought a residential investment property and it went so badly,” is because they didn’t really have the idea that real estate investing is both a business and an investment. Businesses produce income and investments produces income. Businesses have expenses, but an investment doesn’t have an expense. If you bought Apple stock as an investment, Apple the company has expenses, but your stock in that company doesn’t have expenses.  Real estate has expenses. And what we’re trying to show with this picture here is that real estate is both. Real estate is an investment and a business. The question is, can real estate be hassle-free? Can I have it be passive? Do I need to interact with people? Do I have to invest a lot of time? The answer is maybe.

The business aspect of real estate requires—time, interaction with people, specialized skills in tenant and landlord law, understanding how to fix toilets and things like that— however if you outsource all of these things to a professional residential investment property manager, then your investment can be passive and hassle-free. Real estate by itself is not necessarily hassle-free; it’s actually a pain in the neck. But it can be passive and hassle-free if you have the right investment teams, and if you’re buying the right property that will attract the right tenants that will appeal to you and appeal to your personal investment philosophy.

One of the first metrics of success is creating alignment of vision between your expectations and reality. If you’re expecting to rent to a happy pretty family, but  you buy something in a low-income, blue-collar  neighborhood, you might not get a pretty happy family as your tenant. Or if you buy a studio apartment, you’re probably going to get a lot of single or itinerant people. If you buy a commercial property, you’ve got a commercial tenant, which can be a great thing if it is easier to manage.

CLICK HERE for a continuation of this interview: Keys to Successful Residential Investment Property Management

Keyword: Residential Investment Property Management

Investment properties for real estate cash flow or capital gains?

Investment properties for real estate cash flow or capital gains?

INVESTOR = mostly passive + dividends + long term capital gains
TRADER =  mostly active + short term capital gains

As a Hassle-Free Cash Flow Investor, you must clearly understand the difference between an investor and a trader.  Are you investing for real estate cash flow or trading investment properties for capital gains?  This is an important distinction in your investment style / investment philosophy.   Many people call themselves real estate investors when they are really traders.  While you can make a lot of money as a trader of investment properties, it is not the same thing as being an investor.

Hassle-Free Cash Flow Definition of INVESTOR:  An investor converts a lump of cash into assets (investment properties) that have the probability of paying an income stream over a long period of time.   An investor is primarily concerned with real estate cash flow and security of his principal over a long period of time.   To an investor, the increase in the equity value of his investment properties is a secondary benefit.  An investor is generally passive and expects his money to earn more money without the contribution of a lot of personal time and skill.

Hassle-Free Cash Flow Definition of TRADER:  A trader converts a lump of cash into assets (investment properties) that have the probability of being resold for a larger amount of cash in the future.  A trader is primarily concerned about velocity and security of his principal usually over a shorter period of time.  A trader must buy and sell investment properties quickly or carrying costs and time will quickly erode his annualized return.  A trader is generally active and expects to contribute substantial amounts of management time and skill, as well as money.  A trader makes money ONLY if the value of his investment properties increase in value.

Being a trader is a job.  If you are like most people, you already have a job and don’t want a second one. Being a trader is NOT Hassle-Free.  As the owner of a passive income stream from investment properties, your money works so you don’t have to!  A good investor enjoys freedom of time and money.  Begin with the end in mind.   Focus on making good investments that will take care of you in the future while not eroding your quality of life in the present.

People looking to make money in real estate often call themselves investors, but their idea of “investing” is negotiating short sales, going to foreclosure auctions, scouring the world finding “needle in the hay stack” deals, or doing rehabs and “flips”.  All of these are active forms of real estate trading that involve controlling distressed investment properties, improving their value, and reselling the investment properties for a short term profit.   Admittedly there is a lot of money to be made being a real estate trader, but it is a JOB.  I have done over fifty real estate flips in my life and I have made a lot of money doing them.  But doing flips of investment properties is VERY hard and VERY time consuming.  It took me five years of study and practice before I successfully completed my first flip.   If the trader doesn’t show up to work, nothing happens.   Unless you want to quit your day job and become a full time real estate professional, stay away from being a real estate trader and focus on being a real estate cash flow investor.   A Hassle-Free Cash Flow investor should never have to do anything but monitor his real estate cash flow and supervise the team that manage his investment properties.

It is possible to build a real estate cash flow investment portfolio that takes less than one hour per month to manage.  With the right deal structure, leverage (financing), and cash flow it is very possible to achieve investment results over 50% per year as a semi-passive investor.  If you can double your money every two years as an investor working less than one hour a month, why take on the worries and time hassle of being an active trader of investment properties?

TAKE AWAYS:  Being an active real estate trader takes time, skill and tenacity; it is a job.  However, being an investor in real estate cash flow investment properties can be semi-passive, simple, and highly profitable.  The goal of Hassle-Free Cash Flow Investing is to enjoy your quality of life now, while creating financial abundance for the future.

If you are looking for real estate cash flow investment properties that are turnkey and hassle-free, please visit our website:

turnkey and hassle free investment opportunities

Keywords: real estate cash flow, investment properties

Understanding this financing loophole can make you a lot of money…

Here is a hypothetical conversation to help illustrate the relationship between price and financing.

BUYER:            “Hello, I’m a first time home buyer. I’m very interested in purchasing the super-low-priced house you have listed for $100,000.”

BROKER:           “Ma’am, let me show you the virtually identical house next door I have listed for $125,000.  I think you’ll find it more affordable.”

BUYER:            “Are you a moron?  I want to buy the cheapest house! Why would I buy the identical house next door for more money?”

BROKER:        “Unfortunately, the lower-priced house doesn’t qualify for FHA financing, so if you want the cheaper house you’ll have to bring in a 20% down payment.”

BUYER:          “I don’t have $20,000.  I was planning on getting an FHA loan with a 3.5% down payment.”

BROKER:        “If you don’t have $20,000, then let me show you the more expensive house next door that does qualify for FHA.”

BUYER:            “But the houses are identical from the outside! Why would one house qualify for FHA and one wouldn’t?”

BROKER:        “The lower priced home needs a new roof, so FHA won’t lend on it.” (send an email to david at HasslefreeCashflowInvesting dot com to request a free FHA property inspection check list)

BUYER:            “Why doesn’t the seller replace the roof so the property becomes eligible for FHA financing?”

BROKER:        “It’s owned by a bank, and the bank isn’t interested in doing the repairs.  The bank will just keep lowering the price until someone buys.”

BUYER:            “I’d like to buy the cheaper house and fix it up myself, but I don’t have a 20% down payment.  Can I make the repairs first and then buy it with FHA financing?”

BROKER:        “Maybe if it were owned by a regular seller, but the bank doesn’t work that way.  The bank doesn’t want the liability of you doing construction on a house they own.”

BUYER:            “Hmmm…. if I buy the more expensive house my down payment is $4,375, but if I buy the cheaper house my down payment is $20,000 plus the cost of a new roof.  What about my mortgage payment?”

BROKER:        “Your mortgage payment on the more expensive house will be $611 and your mortgage payment on the cheaper house will be $546.”

BUYER:            “Sixty-five Bucks!!! Is that all?!?!  I spend more than that at Starbucks!  If the loans are $40,625 different, why is there so little difference in payment?”  

BROKER:        “The cheaper house will financed by a local bank at 7.25% and the more expensive house is financeable by FHA at the subsidized interest rate of 4.5%.”
                ($125,000 x 96.5% = $120,625 x 4.5% 30yr amortization = $611 payment versus   $100,000 x 80% = $80,000 x 7.25% 30yr amortization = $546)

BUYER:            “I see what you mean.  Financing can have a larger impact on affordability than price!”

BROKER:        “If you want the more expensive house, we should write an offer today.  It just came on the market and I think it will go into escrow this weekend.”

BUYER:            “You’ve got to be kidding me!  The media says real estate is dead and average days on market for houses in this zip code is over six months.”

BROKER:        “You are only partly correct.  Very few people qualify for current bank financing, so if a property doesn’t qualify for FHA financing the property isn’t selling.   However, lower priced homes that qualify for FHA are selling fast and with multiple offers.”

BUYER:            “WOW, the newspaper lumps all the data together by zip code and it’s really misleading.”

BROKER:        “My phone has been ringing off the hook with people interested buying in low priced houses, but the buyers can’t get FHA financing because the properties need work.”   

BUYER:            “If you could get a handyman special for $20,000 down or a brand new house for $4,000 down and $60/month more which would you choose?”

BROKER:        “Exactly!”

INVESTMENT TAKEAWAYS:  Most people don’t buy on price; they buy on payment!   The ability for a customer to buy on payment increases the price a customer is able to pay.   Easy and cheap financing is one of the main reasons why real estate prices went up so fast in the last cycle and tight financing is the main reason why prices subsequently came down so fast.  More people currently want to buy real estate than can get financing. This is creating a pent up supply of buyers (and tenants).  As financing starts to loosen (the US Government is trying everything possible to help this) there will be a flood of buyers into the market.  The question is whether there will be enough buyers to consume the pent up inventory, and that is a very marketplace specific question.   If you are a professional ‘fixer upper’ investor and you can purchase with all cash, there is definitely an opportunity to make a home FHA ready and resell it for a fast profit.  The trap here is experience and hassle!!!  There is usually a fairly small profit margin in fixer uppers, and if you don’t have the right team and experience you’ll eat up your entire profit margin in unexpected repairs and transaction costs.  

In most of the US, the housing market has turned positive and is slowly appreciating!  The macro data will be slow to show this because the published data is usually 3-6 months old before you read about it.   If you would like to talk with a real estate professional about what is happening in today’s investment real estate market, please give me a call!  You can schedule a phone appointment with me by using my online calendar:

David Campbell
Real Estate Investing Strategist
Office: (866) 931-9149 Ext. 1

Is Buying Investment Property Right for You?

If you are considering buying investment property now or in the future, then this article is for you!

Buying Investment Property Image
Read this article to discover if buying investment property is right for you…

You’ll learn how to become a more profitable investor, using passive real estate investment opportunities and group investment opportunities to increase your wealth and to make your life BETTER. That’s really the whole point behind real estate: building a brighter, better, happier future through how we control and use our resources.

Eight Essential Resources

So let’s talk about your eight essential resources.  If you are like most investors, the resources you’re working with are what I call the “above-the-line” resources:  your cash, cash flow, credit, and equity. The “below-the-line” resources are your time, your talent, your relationships, and your control of opportunities.

If you have a very high-paying job – you’re a software engineer, a doctor or lawyer, oftentimes, you are best off buying investment property with your above-the-line resources and getting a professional or someone who is an active real estate investor to leverage their below-the-line resources.  For an investment to work, you need all eight resources, but YOU don’t have to provide them all. For an investment to be passive, your primary contribution must be an above-the-line resource.  If you’re contributing below-the-line resources, by definition, you are now actively involved in that process, and it’s no longer passive.

Why to Buy an Investment Property

One of the reasons that we’re attracted to real estate is retiring earlier than we thought possible, achieving our financial goals sooner, and otherwise compressing time frames. Real estate gives us higher yields, and it allows us to take distribution, or cash flow, without depleting principal.  This is a really, really powerful idea.  That’s why my whole brand is “Hassle-Free Cash Flow Investing.”  If you buy gold, or silver, or stocks, you have equity.  But, in order for that equity to make you a profit that you can spend, you have to sell the equity.  So you sell the gold, the silver, the stocks, and then you have cash, and once you spend the cash, you have nothing left.

But with cash flowing real estate assets, you have an asset that produces a dividend for you on a regular basis, and dividend-producing income property is an incredibly powerful investment vehicle. 

How and When to Buy an Investment Property

One of the cardinal rules behind hassle-free cash flow investing is: there is no such thing as a good or bad property, or a good or bad investment; There’s only appropriate and inappropriate ownership and timing.

You have to make sure that what you’re buying is appropriate for YOU.  You might have a buddy who says, “Hey, I’ve got the investment tip of the year.  This is the absolute best thing.  This is going to go through the roof.”  And it might be great for them, and you say, “Congratulations!  Go do it!”  And they say, “You should do it!”  But should you?

An investment that’s appropriate brings you closer to your personal investment objectives – your personal goals.  If it does, then it’s appropriate. If it takes you farther away from your personal goals and your lifestyle objectives, then it’s not necessarily an appropriate investment, even if it’s profitable.

You also need to consider emotional costs of investing.  I’ve had clients buy very profitable investments, but lose sleep at night over the deal. That is not what you want. So you’ve got to know yourself and know something that might be a great investment for your buddy, and even a profitable deal, still might not be appropriate for you.  As someone who works with passive investors in my projects, the last thing I want is someone to get excited about a high return on investment, write a check, and then lose sleep for the next ten years because they’re worried about loss of principal, or they’re worried about something in the investment that is really just not suited to them, or they’re looking for something that’s unrealistic to achieve.

Challenges of Individual Properties

Individual properties are always active investments.  If you buy an investment property, and you hold it in your name or the name of your entity, and you’re the manager of that entity, and the buck stops with you, you’re never totally passive because you’re putting in your resource of TIME.  You can find hassle-free properties – properties that are really easy to manage, and which don’t take a lot of your emotional resources to deal with – but they still take time.  How passive is your income then?  You might be making thousands of dollars a month from your real estate portfolio, but if you’re still managing your manager, I say it’s not passive – you just have a really well-paying job.  You get a high return on your time investment.  Other investments, like group investments, are completely passive.

Both are good – I’m not knocking one or the other. But ask yourself, when you’re looking at your time, which is more appropriate for you.  If you’re a high income earner, it probably makes more sense for you to be passive, so you don’t take time away from your high-paying job.  If you’re a low income earner, and your skills and resources and relationships are more valuable than your salary, then you might consider leveraging your below-the-line resources, and using your time to produce revenue through real estate.

Buying Investment Property with Group Investing

Group investing is when several individuals come together to pool their financial resources, managed by a group of professional investors.  I have a team behind me.  I get to lead my team, and I get to be the face of the company, but I have a lot of really smart people behind me.  Having a team is a really important part of the process, and if you want to leverage a team, group investing is the way to go.  When you invest in a group investment, it’s limited liability to you, as the investor.  You’re purchasing membership units or shares in a company, and you did not sign personal recourse on that debt, so even if the property eventually is sold at a loss, your total loss is whatever you wrote a check for.  That is a very powerful thing, especially if you’re a high net worth person and you’re looking at buying investment properties and diversifying your assets.  You might pick up maybe ten different assets – you have ten percent of your net worth in ten different deals, but if you had signed personal liability on all of those deals, you might have nine deals profitable and one deal turns so upside down that it wipes you out because of that personal recourse on the loan.  When you’re in a group investment, you don’t have personal liability.  Your liability is only what you write a check to the deal.  If there is negative cash flow in the future, you can always choose to meet your negative cash flow or not.  When you have whole ownership of a property, and you own it, you either make your cash flow contribution, or the bank takes it back. That’s pretty much it.  In a group investment, that’s not so.  You have more options.

Group investments are a way to force equity without (your) effort.  You can do developments, and you can get the benefits of changing a property’s use or finding the needle in the haystack deal, but you don’t have to put the time in to do it yourself.  You can leverage MY time and MY team and MY resources and MY brain.  Group investments involve very little time for you – almost none.  You make your investment decision, and then, when the project has a milestone, participate in an investment update or video or a webinar or a phone call to voice your opinion – what would you like to do?  Maybe you have to vote on something, but there’s almost no time involved for you, as a passive investor in a group investment.  That’s the whole idea behind the management team.  There’s no hassle.  You never have to deal with a tenant phone call or the bank calling or meeting the repair guy.

Also, in group investments, you can get access to deals none of us could get on our own. I like to say, “Deals attract dollars, and dollars attract deals.”  Instead of me just investing my money, I can go to the marketplace and say, “Look, I have a great pool of investors that have been with me for years and they like what I do.  They would like to invest in a passive way, so we could syndicate capital to do this deal.”  I can go to the marketplace and do much bigger deals.  Because of my track record of syndicating and doing larger commercial projects, that puts me  – and you! – in deal flow that the average person is not in.

Group investments allow you to do bigger and better opportunities, and they also help you build credibility if you’re a young investor.  I remember one of my first syndications – I wrote a $75,000 check to participate in someone else’s medical office building.  At that time, I had never developed a medical office building, ever in my life.  But I wrote a check to that deal because I liked it, and from then on, I could say, “My partners and I are developing a medical office building in Texas.”  I was just the above-the-line resource guy.  I put in the cash.  My partner did all of the work.  He was the below-the-line resource guy.  But that gave me credibility so that when I wanted to develop my own properties, the banks and the sellers and my team took me more seriously.  It was also a great way to do what I call “earn while I learn” so that, while that medical office project was going on, I was entitled to be a part of a lot of those conversations and get access to a lot of information that was going on because it was my property.  I had someone who was managing it, but they were managing MY money – I’m an owner, and I want to know what’s going on. That’s a great way to learn – earn while you learn.

Who should consider doing group investments?  Busy people.  People who want to earn while they learn.  Retirement funds.  If you like doing bigger deals; if you want to get into more active projects.  Oftentimes, the bigger the project, the higher the margin is.  In a small, single family house, there are a lot of people competing to buy that investment.  When you get to a bigger project – a multi-million dollar project, there are fewer people who have the skills and the resources to take on that project, so the margins get bigger.  If you are a small fish – small investor – but you want to tap into those higher margins, the way to do it is by leveraging other people’s resources.

Investment Property Diversification

You must understand the concept of active versus passive diversification.  You might keep buying investment properties to create your own big portfolio of houses, and do that with your own cash while putting your IRA into group investments so you have passive diversification.

Marketplace diversification is powerful, too.  You might feel very comfortable buying investment property in certain markets.  You might know your hometown or where you went to college or certain other places where you went on an investor field trip and you feel very comfortable.  But if you wanted to go to markets where you might not ordinarily choose to be, but because there’s a great opportunity and a great story, and the marketplace is strong, and you have a team there – you get to inherit my team – and that gives you an opportunity to be invested in multiple marketplaces without having to spend all of the resources to build your own team in those marketplaces. Also, product type diversification – you might say, “Housing is great, David, but in this recession, I’d really like to own a medical office because medical offices are very insulated from recession in a lot of ways.  I also want to own a discount retailer.  I want to own the bottom of the market – I want to own the 99 cent store type of businesses because those businesses do very well in recessionary times.  And I also want to own apartments because people are renting.”  Whatever you want to own, whatever your resources are, you can create more diversification by being in a group investment, by having a small piece of multiple pies in different markets, in different product types, and in different deal types.

Making Money With Group Investments

The way that we make money with group investments is through passive equity and passive cash flow.  Passive equity is just the market smiled on you, and the property went up in value.  That seems like kind of a silly thing at this point in the market, but cap rates are very high right now, so we’re talking about commercial property today.  Commercial property is valued by its income, and the income might stay the same, and the property value could go up simply because investors are willing to take a lower rate of return.  Right now, investors expect a very high rate of return, so even three years ago, investors might have bought a property at a seven cap, but today, they’re expecting an eight and a half cap for that same property, just in a three-year time frame.  What that means is that, even though the cash flow is the same, the properties have come down in value, so today is a great opportunity to buy those properties at a high cap rate, and when investor confidence returns, cap rates will go down, and people will pay more for the same income stream.  That’s a windfall, so you want to be buying investment property when cap rates are high – they are – and you want to sell when cap rates are low.  Right now, cap rates are at the highest they’ve been in a long, long time.  So it’s reasonable to expect that, if history repeats itself, the future will bring us lower cap rates.  This is great for people who are buying now.

Found equity means you found someone who just got caught in an awkward situation, and the timing was not right for them, so they’re willing to give you their equity because you solved their problem in some way.

Phase equity is, for example, you could buy a retail property that’s leased for the next 30 years, and every five years, the rent goes up.  Every time the rent goes up, the property value goes up because commercial property is valued on the income.  Rent increases on commercial property are a really big deal.  If you can predict what those rent increases are going to be, you can also predict what your future value is going to be.  That’s what we call “phase equity.”

Forced equity is when you take something and change its use.  You added value to construction or rehab or subdivision or some way you’re forcing the equity in the property, and I like to do all of these in different ways.

Investing objectives vary in each project.  I would say we’re looking at creating blended returns.  “Blended” means we’re going to take the equity growth – or what I often call an “equity kicker,” and add that to the cash flow.  That gets us our blended rate of return.  For example, an investment property might pay you eight percent cash flow.  You might say, “Do I really want to buy something if it’s only eight percent yield?”  At some point in the future, you’re going to get an additional twelve percent per year in terms of equity because as the mortgage gets paid down, that equity is your equity – it’s just not liquid yet.

Why Buying Investment Property Makes Sense

Cash flow is liquid money that comes out to you on a monthly or quarterly basis or annual basis – that you can spend.  Right now, mainstream sources of passive income are not an option.  The people who were investing for passive income for the last generation – the vehicles that they used to generate that passive income don’t work right now.  Bonds and CDs are not outpacing inflation.  You can even get federal government-backed bonds that are below the rate of inflation.  The interest rate on bonds are at an all-time low, and when interest rates go up, it’s kind of like cap rates.  So if you were buying a bond at a low cap rate – maybe a one and a half or a two cap – and suddenly investors are expecting four percent return on their money for bonds, then the value of your bond is discounted substantially.  You might lose a very large portion of the value of that bond simply by interest rates going up in value.  Bonds are not necessarily the safe investment that people think they are, especially when interest rates are at all-time lows.

The stock market is risky and unpredictable.  It’s manipulated by governments; it’s manipulated by currency; it’s manipulated by ERISA laws that require baby boomers to take money out.  Robert Kiyosaki wrote about it in one of his books, where the baby boomers are being forced to take money out of their stock portfolio, but the GenY – the people who are between 20 and 28 years old – they don’t believe in the stock market. They are not investing in the stock market.  They’re occupying Wall Street; they’re not buying Wall Street.  So you have a whole generation that’s selling, and there’s no one buying.  It’s the ultimate Ponzi scheme.  The buyers have gone away, and so what happens to values?  They’re very fragile.  I’m very nervous about buying in equity on the stock market.

When you’re buying investment property in a group investment, you’re buying something tangible.  You’re buying a piece of real estate.  You’re buying something that is dividend-producing.  That’s why, again, hassle-free cash flow investing.  We want things that produce dividends for you on a regular basis.  We also have a high risk of hyper-inflation.  All of the seeds for inflation have already been sown; they just haven’t arrived yet in consumer pricing.  The money supply is there; the banks have the money; it’s just not in circulation yet.  When that money goes into general circulation, we’re going to see inflation happen.  When that does happen, you want to be well-positioned in real estate, which benefits from inflation, and leveraged real estate.  You want to have good debt against your property – so positively arbitraged debt with a cap rate that’s higher than your interest rate so you can pay that mortgage off with cheaper dollars.  You might borrow $100,000, which is five Toyotas.  If a Toyota is $20,000, then that makes sense.  Five Toyotas is $100,000.  You could potentially pay off that $100,000 loan with two Toyotas, when a Toyota costs $50,000, and the only thing that happened is our currency devalued.  I’ve written a lot about inflation on my blog, and I’ve got some great webinars about inflation, if you want to know more about that.

Why now?  We’re at an unprecedented time in history to take advantage of the real estate market, and for those of you who see the opportunity, but you don’t quite have the skills and knowledge or the time inclination to dive in headfirst, being a passive investor is a great way to get involved.  Prices are low, interest rates are low, sellers are flexible, inflation is looming, and there’s nowhere else to go.  I don’t know of any other options that can produce dividends for you that are as safe as the real estate investments that we’re talking about.

Here is a typical market cycle, where values go up and values go down over time.  A lot of people say, “I want to buy an investment property at the bottom of the market.  You tell me when it’s at the bottom, and I’ll buy.”  There are a couple of flaws with that logic. The first is, the bottom is one nanosecond in time.  When we hit that bottom – that nanosecond – you’d better deploy all of your assets into real estate as quickly as you can.  But that’s not possible.  I’ve been working on deals that have taken eight months to get to the place that they are where I can present them to you today.  In that eight months, the market is moving and changing.  The way that most recreational investors shop is, they say, “If everyone’s buying, I want to buy.  When everyone’s selling, I want to sell.”  That’s the opposite of the way that you make money.  When everyone’s selling, you want to buy, and when everyone’s buying, you consider selling.  Whether we’re on the left side of that trough or the right side of that trough, or somewhere at the bottom, nobody knows.  Nobody has a crystal ball that can predict where we are in the market cycle.  All that we can say with fair confidence is that we are a long way off that peak. We’re somewhere in that trough, and if you look at market cycles, it doesn’t really matter whether you buy at the left side of the trough, and you go down before you come up, or if you buy it on the right side of the trough, and you think, “Really?”  the only difference may be a little bit of time.  But if you’re buying cash flow producing, dividend producing, income producing property, then the income is there, regardless of what happens to value.  Value only matters two times:  when you’re refinancing, and when you’re selling.  If you’re not refinancing or selling, who cares what the value is, as long as the dividend is coming in on a regular basis.

That concludes this educational article on buying investment property.  If you think there is a place in your personal investment portfolio for group investing, a great way to get started is to send an email to, and we can schedule a personalized investment strategy consultation to get you going.  I look forward to hearing from you.

Real Estate Economic Forecast Navigating Investments in Interesting Times

Navigating Investments in Interesting Times
Economic forecast by professional investor David Campbell
As Americans and as investors, we are definitely living in interesting times. Regardless of how you personally voted last Tuesday, it is essential to feed the election results into your investor crystal ball so you have a more educated guess at where economic puck is going.

I will write about our economy in much more in depth in the future, but for now here’s my basic economic forecast. If you agree or disagree with this forecast, I would love to know what you’re thinking. Come participate in a dialogue on our Facebook fan page:

COMING SOON – GOVERNMENT DRIVEN ECONOMIC BOOM: On Tuesday, American’s reconfirmed they are in favor of a socialist economy. The people have empowered the present federal administration to spend more and print more to increase the power of our federal government. I believe that America is about to experience an economic “boom” led by a major expansion of federal government spending designed to help American’s feel that the socialist economic agenda is successful at growing the economy. The current administration will spend and spend and spend until they can say “I told you socialism would grow our economy”. The massive amount of federal government spending will be targeted at bringing a divided country together. Most Americans will think we are experiencing an economic boom but it will really be the printing press at work. Inflation is like a drug that makes you feel great until the buzz wears off; then you have an economic hang-over. I believe we are at the end of the economic hang-over created by the last boom and bust cycle. Expect to see a major expansion of social programs funded by the federal government. I don’t believe the declining value of the dollar will plummet society into chaos, however I am more confident than ever that high rates of inflation are imminent and inevitable. Caveat: local and state governments are being pressured to provide social services they cannot afford. Only the federal government has the power of the printing press. When you are looking for a state or city to invest in, consider the economic health of the local and state government. Although I love living in California, I will not invest here because the state is on the verge of bankruptcy and their aggressively high tax burden is causing jobs and people to migrate to the South and Southeastern states who are more job friendly. Texas is top of my list for states I want as a business partner. Retirees will have their fixed income eroded by inflation and will be more prone to relocate to lower cost parts of the country; especially those warmer states with no state income tax: Nevada, Florida, Texas

COMING SOON – AMERICAN ENERGY BOOM: The amount of untapped oil and gas reserves in America is staggeringly; America has more untapped oil and gas than all of the middle east combined. New technology (“fracking”) has given us a cost effective way to extract this resource. Low natural gas prices combined with EPA regulation uncertainty and lack of infrastructure in the North Dakota oil shale means extraction has only just begun. The current administration is likely to capitalize on aggressive natural resource extraction to help our country feel that their socialist agenda is creating prosperity. The current administration will expand and tax energy extraction like never before. Expect a surge of oil and gas production all over the US but especially in North Dakota and Texas. The taxes generated from the regulation and sale of this natural resource will provide much needed revenue to expand government social programs. This monetization of our oil and gas resources will strengthen the appearance that socialism is bringing prosperity to America which in turn strengthens the political power of the current administration. This revenue will create a lot of new jobs. Some of the jobs will be real (energy) and some will be artificially created through more and more federal stimulus.

INFLATION = CURRENCY SUPPLY x VELOCITY: Increased government hiring, increased entitlement programs, and an energy sector boom will stimulate velocity or the speed at which money circulates. The velocity of money will create inflation faster than increased supply of currency because the impact is more immediate. Many Americans are hoarding cash because of the economic uncertainty. As America emerges from the economic rock we’ve been hiding under, people will start spending again and that will rev our economic engine faster and faster. Most Americans are emotionally “done” talking about politics and are ready to watch the new Fall line up of TV shows, buy a new iPhone 5, and start shopping for Christmas. As aggressive government spending trickles down to job security and consumer spending we’ll see an uptick in the velocity of money. The reason we have been able to quadruple the money supply without seeing noticeable inflation is three fold (1) we exported most of this newly created money to foreign countries thus it is not circulating in the hands of consumers (2) consumer spending / velocity of money has been extremely low (3) Americans who want to borrow but do not qualify.

So before you misinterpret that I am rosy and bullish on the American economy, know this… inflation always leads to bubbles and mal-investment because it is difficult to know whether economic activity is a result of genuine consumer demand or government stimulus. We’re about to experience a period of prosperity that is part real and part stimulus. It will create un-uniform inflationary bubbles that will eventually deflate. Image it is 1999 all over again. Great fortunes will be made in the artificially stimulated and highly volatile stock market, the real estate market, and the energy sector. This next economic bubble could last for several years, but remember to question whether the prosperity we’re about to see IS REAL and whether it can be sustained. While it may seem tempting to invest for real estate appreciation in this next market cycle remember that you will need to time your exit carefully because each injection of stimulus will make the boom and bust cycle larger.

I advocate investing in income / dividend paying properties using high leverage and positive arbitrage. When the inflation happens, you can repay the debt using devalued currency, however if values decline you will not need to sell prematurely because you are collecting positive cashflow. I remain a fan of entry level housing and small retail properties that cater to low income demographics (Dollar General, Family Dollar, Dollar Tree, etc.) I want to own properties in geographic markets whose basic economy includes energy and/or agriculture because those industries are poised to remain relatively strong even if we experience stagflation. I want to stay away from owning properties in dense urban environments (e.g. downtown) that could be the gathering place for disgruntled mobs of people whose social benefits were protested or interrupted.

There is a small possibility that the current administration will socialize your existing pension plan, IRA, and 401(k) and force your hard earned retirement savings into a government facilitated plan like social security. Although I think the possibility of this happening is small, I think it is a risk worth mitigating by having your IRA self-directed into tangible assets or plan for your retirement needs outside of a traditional qualified contribution plan.

The second biggest risk to your financial future is socialization of your assets through devaluing of our currency. The number one biggest risk to your financial future is the failure to act when you see an opportunity. TODAY’S AMAZING BUYERS MARKET WILL NOT BE AROUND MUCH LONGER. Buy as much positively arbitraged real estate with 30 year fixed interest rate debt as you can and be vigilant.

I wish you much success navigating these interesting times.

Best regards,

David Campbell
Real Estate Investing Strategist
Founder of Hassle-Free Cashflow Investing
Office: (866) 931-9149 Ext. 1

About the author
david campbell cashflow investingDavid Campbell is the Founder of Hassle-Free Cashflow Investing an organization that helps train real estate investors and business owners and assist them with the acquisition of turnkey real estate investment opportunities. David is the CEO of a commercial real estate brokerage and property management company. His professional background includes production home building, commercial real estate development, apartments, condo-conversion, retail, and office.

Real estate road trip day five

After last nights great dinner on the riverfront in Chattanooga it was fun to sleep at the historic Chattanooga Choo Choo hotel. I only wish we had more time to explore the train museum and find a cool train shirt for my four year old son. He’s a rail fan.

Not only does this end our fifth day on the road, it marks my fifth day without a computer. I bought the iPhone 5 before I left and wanted to see if I could cope with a busy travel schedule with my phone as the sole source of computing power. It has been fairly easy to update my Facebook page. Friend request to watch some fun road trip videos and play our “like” to win game. Every Facebook like on my posts during our road trip is worth one entry into a drawing for $100. Winner announced on Halloween.

Today in Chattanooga we evaluated five dollar general stores. Then drove through Knoxville where we visited a strip mall we already own and manage. More on that later.

We ended the day in berea Kentucky at historic Boone tavern. Today is short and sweet because our day was long but look for an epilogue in the future.

Until next time

David Campbell

Real estate road trip day four

Today was one of those rare days where everything was memorable.

The weather is still warm but starting to feel like fall as we head north into Alabama and Georgia. The occasional tree is yellow or crimson, but mostly the humid green of summer still dominates the countryside.

Our California accents betray us at the gas station in small town Georgia. The clerk says “where y’all from cuz ya ain’t from roun here” when I ask her to guess she says “somewhere northern like Kentucky”. I laugh aloud. “We are from California” and it is her turn to laugh.

We drive into wadley Alabama and my first thought is how exquisitely beautiful the riverfront is. My second thought is how extremely vacant their downtown is. There are only a handful of commercial buildings in the entire “downtown”: a vacant grocery store, a thriving bank, a tiny post office, a cell phone store, and a row of closed stores currently being used as an enormous casket warehouse for the church cemetery across the way. We are here to buy the dollar general store. It is the only place to buy milk, eggs, deodorant, and toilet paper for 15 miles in any direction. Wikipedia tells me this town is home to 500 residents and a state college (2 year school). The store is filled with shoppers that appear to be stocking up. The store clerk says the 8000 sf store is always busy. The brisk pace of her cash register leaves little doubt that this store has a monopoly on all basic commodities.

Outside the store I overhear two old friends talking about guitar building, poison oak, and pickled egg recipes. I approach and they give me a cautious but warm southern welcome. They are proud of their town and have no doubts that it will be around for all eternity. A navigable river, a usable rail spur, and an abundance of fertile farmland make this a crossroads of natural resources. This is also one the most beautiful places I’ve ever been.

We head in the general direction of the local college (5 blocks away) and stop to ask directions from a man carrying a bag of produce freshly picked from the community garden. He volunteers a tour of his fair city which we gladly accept. Three hours later we’ve toured the unbelievably impressive local college, met the local bank chairman and shared homemade pimento cheese sandwiches in the kitchen of the retired school superintendent. To top off the memorability of the day we fed catfish in the private pond of our new friend who invites to stay with him next time we are in town.  I love the incredible hospitality that comes so naturally in the Deep South.

We head north to Georgia where we evaluate two more dollar general stores. The recurring theme is that these dollar stores are packed everywhere we go.

Tonight we stay in the Chattanooga Choo Choo hotel. My 4year old son would love it here.

It was a great day I will remember for a long time.

You can watch today’s video updates / antics on Facebook:

Real estate road trip day three

With hurricane sandy off the coast of Florida this morning’s breakfast on the beach was a little exciting. Fortunately we were inside the restaurant of the vero beach resort and spa… An amazing place!!! We booked our rooms through Priceline and got a great deal. When we checked in we had the option to upgrade to an oceanfront balcony suite for an additional $25. How can you say no to that. The room was enormous and the view of last nights storm was breathtaking.

Jim Thylin and I watched San Francisco win game one of the World Series in the hotel bar. I admit to being up later than I should have. I had so much fun in Vero Beach I didn’t want to leave. So much fun I will be purchasing rental property in vero beach just so I have an excuse to come back and visit on a regular basis. It is clear to me why this town is among the wealthiest in the country. It also houses a huge number of people on public assistance. I was trying to find apartment data for the area to help me understand the rental market. All but one of the apartment communities I found were tax credit, government subsidized, low income apartments. Many of them look beautiful but only allow low income people to live there. The rents are also very low because of the government subsidy. It looks like an interesting niche to rent to the working class who don’t qualify for public assistance. There appears to be very little rental housing stock available in the $800-900 price range.

We left Vero Beach ahead of the hurricane and drove through Bronson, Florida and Bell, Florida on our way to Georgia. We looked at two properties leased to the us postal service. More due diligence is needed, but I am very optimistic about the potential cashflow these properties can create.

I posted several Facebook updates and videos through out the day. I also announced our “like” to win game. Each real estate road trip Facebook post that you “like” gets you one entry into our drawing to win $100. Check all week to follow our video updates. I will be announcing the winner of our “like” to win game on Halloween. If you want to play and we aren’t Facebook friends you can friend request me and then you’ll have access to our zany road trip videos.

Tomorrow we drive to Chattanooga to look at Dollar General properties for purchase.

Until tomorrow… See you on Facebook.

-David Campbell

Real estate road trip day two

We had a great day in Florida. Woke up at the Orlando Hyatt. That hotel is a great launching pad for the day. Beautiful view of the airport. The sunrise today was amazing.

Throughout the day we posted videos clips in Facebook.

I hope you like the videos.

Met up with team members Jim Thylin and Michael Newton MD for breakfast. Drove two hours to vero beach. along the way it was interesting to see palm trees and pine trees growing side by side. Beautiful!

Vero beach was an interesting collision of the top 1/10 of one percent and the bottom 10 percent of America. We saw some of the most beautiful real estate you can imagine and frankly we drive through some areas that made me a bit nervous too. The project we are working on is like new houses for the working class. We took a lot of video you can watch at our showcase event on 11/1/12 . We interviewed the owner of the property, the property manager, and the construction manager for the project. Great stuff!

We drove around vero looking at the area schools and employment centers. All promising signs for stability in the area.

Checked into the vero beach resort and spa which is a gorgeous place to stay. If you are looking for a get away, you’ve got to stay here! Wow. Great food and an amazing property.

Tomorrow off to look at some net leased post offices in central Florida. Be sure to check out my Facebook page for the most up to date progress on our real estate road trip .

Until tomorrow…. Yours truly, David Campbell

(PS. Excuse the typos… The entire real estate road trip blog was typed with my thumbs on my iPhone 5)

Due Diligence Road Trip – 10/22/12 – prep day

Due Diligence Road Trip – 10/22/12

10/22/12   Over the next nine days, I’ll be taking a real estate due diligence road trip and will journal the experience in real time right here on my blog.  Here’s where we’re at today.

DOLLAR GENERAL: I have contracted to purchase three commercial properties in Georgia and Alabama leased to Dollar General.  I am purchasing these at a package price and plan to acquire them using non-recourse debt from a local lender and syndicate the equity from my investor relationships.   I’ve completed this exact business plan in the past and it worked well.   My company earns a real estate acquisition fee at closing and a property management fee based on the gross income.   Closing on these properties as a syndicator is a base hit.   I really like the tenant Dollar General.   I also like that we are purchasing these properties at a low price per sf lease rate and low price per sf purchase price.  I would rather buy a low price property with a low rent rather than a high priced property with a high rent.   There are more tenants at the lower end of the market than the higher end.  Also, there properties are all in contract far below replacement cost.

CLASS B OFFICE: I have also contracted to purchase an office building in Louisville, Kentucky.  We’re buying it at a good price and it is currently leased for five years to a human resources company at an attractive lease rate. I’ve located a lead investor willing to sign personal recourse on an 80% LTV loan from US Bank at 3.75% on a 5 year fixed rate.  At this LTV and interest rate, this property is a CASHFLOW KING.   I plan to syndicate the purchase equity from my investor relationships.  There is another office building for sale immediately adjacent to the one we are buying and it is leased to Wells Fargo Insurance.   While we are in Louisville, we’re going to see if we want to buy this second building as a way of getting economies of scale in this specific market. My company will earn a real estate an acquisition fee at closing and once acquired we earn a property management fee based on the gross rents collected.  Another base hit.

POST OFFICE: I have also contracted to purchase two post offices in Florida.  We’re buying it at a good price and it is currently leased for six plus years to the US Postal Service.  A lot of investors are worried that the USPS will go out of business.   That has driven prices down and CAP rates up (a good thing for buyers).   If investor confidence returns to the general market or to post offices specifically the price of these properties should go up even though the rent stayed the same.  My company plans to earn a real estate brokerage fee at closing and once acquired we earn a property management fee based on the gross rents collected.  Personally, I don’t think the post office is going to shut all of their doors. If the post office closes the facilities we are purchasing we still own the real estate which can be leased to a new tenant.   My company will earn an acquisition fee at closing and once acquired we earn a property management fee based on the gross rents collected.  Another base hit.

Here is the purpose of our due diligence road trip:

1) confirm if the properties can be re-rented in the future at similar rents to what we are purchasing them for

2) confirm if there is anything about the property that would cause higher expenses than our forecast

3) confirm if there is anything about the property that would limit the marketability of the property in the future

 4) learn as much as we can by asking lots of questions

5) solidify relationships with people that can help us with the acquisition and future management

6) gather additional market data and video clips that will help us raise the equity for these properties

7) create a photo graphic journal of the properties that will assist us in future management efforts

Here is our big picture Due Diligence Road Trip schedule:

10/23/12  Fly Oakland,CA  to Orlando, FL stay at the airport Hyatt.   I like that the concierge will pick my bags up from the baggage claim and deliver them to my room.   I get in late tomorrow.  It will be nice to walk from my plane to my bed without jumping on a shuttle or standing in line.

10/24/12  Drive to Vero Beach Florida where we are looking at a portfolio of 50 single family homes which we intend to resell one at a time to our investor network.  More on this later.  We’re staying at the Vero Beach Hotel & Spa (a kimpton hotel).  IMPORTANT LESSON: make business and travel fun or you’ll dread doing it.  As Mary Poppins says “Find the fun and SNAP the job’s a game”

10/25/12 Drive through central Florida where we will look at the two post offices we have in contract.  I’m hopeful to meet the post masters of each post office.  We’ll see if we can set that up.  We then drive up to Georgia where we’ll drive by a net leased Fred’s Pharmacy that I tried to get into contract to purchase before this trip, but my offers were too aggressive and I didn’t get anything in contract.   Looking at the “bird who got away” is almost as important as looking at the deals I was  the winning bidder on.  I want to see what someone else saw in the property that I didn’t and maybe the property will come back on the market for me to bid on in the near future.

10/26/12  Drive by the three Dollar General stores in Alabama and Georgia.  These stores are in small towns which mean the acquisition CAP rates are higher (better cashflow)  I want to feel comfortable that these towns are not going to disappear; the town needs the store; there is no where else for the tenant to move that is cheaper than my store; if the tenant does move out I will be able to place a new tenant.   There are pros and cons to buying properties in rural markets.  I think technology shifts and cultural beliefs are going to enable a resurgence in small town living.  I also like that Dollar General thrives in small towns where they basically have a monopoly on the local retail market.  It’s like walmart for small towns.  I also like that the tenant is national credit. We’re staying at the Chattanooga Choo Choo.  It’s a song; It’s a train; It’s a hotel!   My son loves trains.

10/27/12 We’re doing a second drive by on the Dollar General Stores.  We’ll have seen them at night (yesterday) and during the day.  That gives us an important perspective on a retail property.  Then we head off to Knoxville where we check up on a strip mall our company currently manages.   We completed a lot of construction at the property in the last few days so it is a perfect time for me to do an inspection and shake hands with our tenants.  This night we’re staying in a very unusual and very old hotel named after Daniel Boone.  The hotel has super high ratings and the pictures look amazing!  Whenever I can I  like to stay at a place with character.  The breakfast at this hotel is supposed to be AMAZING!

10/28/12  We have a short drive to Louisville, Kentucky where we will explore the local office submarket and do a walk through on the two office buildings we are contemplating purchasing.  Then we drive to Indianapolis where we get to meet up with some old friends and clients.  Overnight in Indianapolis.

 10/29/12  We drive to Chicago where we meet with a developer who buys old duplexes and fixes them up VERY NICELY and rents them out.   I’m impressed with the photos and math that I’ve seen online.   The owner of the development company lives near me in California and we’ve discussed how to joint venture on his Chicago rehab projects.   If the properties and team are strong, I’ll be introducing these duplexes to our investor group. 

I’ve been planning this due diligence road trip for about three weeks. Today is the final prep day.   I’m getting everything in my office set on autopilot and also finalizing meeting details with all of the team members we are meeting with over the next week.

Here are today’s important lessons for real estate investors.

1) I have specific properties in contract before going to the local market.  I have a business plan to acquire the specific properties and why they make sense for me to own and manage.   I’ve conducted 90% of my online due diligence before getting on a plane.  My due diligence road trip to the market isn’t to find a property, but to confirm my decision to buy something I’ve already researched and control.  I may find something new to buy, but that isn’t the reason I’m getting on plane.   I can be VERY efficient during my travel because I have everything scheduled out down to the 30 minute increment.  I have my hotel’s booked etc. 

2) I am making sure to pace myself during a long due diligence road trip.   I’ve planned to be in bed at a reasonable hour and up early.  Daylight is the most precious time of a due diligence trip because you don’t see much at night.   When I’m looking at lower income areas I have planned my schedule to do a double drive by… once in the day and once at night.  This is potentially less important in more affluent areas.

3) I’ve scheduled some unique experiences to have as part of the trip.  I’m looking forward to staying on the Atlantic ocean, seeing the train museum at the Chattanooga Choo Choo, seeing old friends in Indianapolis, staying at the Boone Tavern on the list national registry of historic places, etc.   This is undoubtedly a business trip, but I’ve made sure to include activities which make me very excited about going on the trip.  Real estate investing is a marathon not a sprint.  Make sure you enjoy the journey.

Here are my travel tips for the day:

1) I like flying Southwest because there is no change fee.  You never know what’s going to come up when you’re on a road trip and need to stay an extra day or fly home early.  I once flew to Detroit to look at a property and I’d budgeted 30 hours to be in the market.  I knew within 30 minutes that I had no interest in Detroit and was ready to come home.  I booked that trip on an airline other than Southwest and it was cost prohibitive to change flights.  I spent my one day in Detroit at a bar celebrating with Red Wings fans. 

2) I keep all of my project critical documents in an online file storage system like google docs or drop box.  This enables me to be productive while working from my office remote.   I can also give a password to one of my team members and ask them to process a document while I’m on a plane.

3) PRICELINE is awesome when you don’t care exactly where you want to stay.  For example, I didn’t care exactly which four star resort I stayed at in Vero Beach.   I let priceline pick for me and I saved 40%.  Google has a new hotel search feature that has helped me narrow down my hotel choices.    I also like using hotwire when I am looking for a good price on a specific hotel.   There are iPhone apps for priceline and hotwire.

This due diligence road trip blog is a fun experiment for me. Please comment or say hello down below so I know whether it is worthwhile to keep my travel journal online like this.

If you are going to be in any of the cities we’re visiting during our due diligence road trip, send me an email and maybe we can connect over a meal.

due diligence road tripDavid Campbell


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Forgiveness of Debt Tax on Short Sales vs. Foreclosures

Forgiveness of Debt Tax on Short Sales vs. Foreclosures

by Renee Daggett

The real estate market has been rocky for the past 4 years.  However, there is a law about to expire on December 31, 2012.  If you have forgiveness of debt on your primary residence, you don’t have to pay the tax on the amount forgiven.  However, if you sell your house on January 1, 2013 and have an outstanding loan, you WILL have to pay the tax on the amount forgiven.

Taxpayers facing foreclosure or short sale on their principal residences have been able to avoid some of the income tax that would normally be assessed thanks to the Mortgage Forgiveness Debt Relief Act of 2007.  But that relief is set to end for home transactions that occur after December 31, 2012.

The act will expire at the end of this year; therefore, if you have fallen behind on your mortgage payments and are facing foreclosure or the short sale of your home, it may benefit you to have the transaction completed before 2013. Here are some important facts to understand about foreclosures and short sales.

Understanding Forgiveness of Debt Tax


1. You are deemed to have involuntarily “sold” your home, making it subject to taxes even if it resulted in a loss.

2. The IRS will issue you a Form 1099-A showing the balance of your loan at foreclosure and the price the bank was able to sell the house for.  This is often referred to as the home’s market value.  The difference between your original investment in the home and the market value is the gain or loss on the “sale” of your home.

3. You may also receive a Form 1099-C, or Cancellation of Debt, showing the amount of the loan the bank forgave you when it foreclosed.

4. Normally, debt forgiveness results in taxable income.  However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may still be able to exclude up to $2 million of debt forgiven on your principal residence until December 31, 2012.

5. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that home.

6. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

7. Proceeds of refinanced debt used for other purposes do not qualify for the exclusion – for example, to pay off credit card debt.

Understanding Forgiveness of Debt Tax if you SHORT SELL…

1. You have voluntarily sold your home, and the proceeds from selling the property will fall short of the balance of what you owe on it.  The lender must agree and determines whether to allow the short sale.

2. The lender forgives the balance of the debt on your home by entering into an agreement with you and the buyer.  Your lender may require you to contribute some amount of money in order to go ahead with the transaction.

3. You will receive a Form 1099-S showing the balance of the loan at the short sale and the sale price or market value of the home.  The difference between your original investment in the home and the market value is the gain or loss on the sale of your home.

4. You may also receive a Form 1099-C, or Cancellation of Debt, showing the amount of the loan the bank forgave you when it agreed to the short sale.

5. Again, forgiveness by the lender of the debt usually means you have reportable income.  However, because of the Mortgage Forgiveness Debt Relief Act of 2007, you may still be able to exclude up to $2 million of debt forgiven on your principal residence until December 31, 2012.

6. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

7. Proceeds of refinanced debt used for other purposes do not qualify for the exclusion – for example, to pay off credit card debt.

So what if the property you own is a rental?  The IRS says there’s no free lunch here.  Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions – such as insolvency – may apply.

If you have the option, seek legal and tax advice BEFORE you sell on a short sale or go through a foreclosure.  Do tax planning ahead of time, before it is too late.  Call our office to discuss your options.


Renee Daggett is the president of Administrative Bookkeeping Co., Inc. She received a bachelor’s degree from San Jose State University in 1989 and is an Enrolled Agent tax preparer (enrolled to represent tax payers before the IRS). Renee is also the author of “Your Financial Flight Plan: Pilot Your Business To Profitability.” In her book, she demonstrates in a creative way the reasons why every business owner needs to be a better manager of his/her business.



 Keyword: forgiveness of debt tax

Consistent and Focused Actions Lead to Successful Results

Remember the slogan, “you reap what your sow?” To get the results that you desire, like finding great deals or new investors, you need to stay focused on doing the things – the actions – that lead to your desired results, just like the Law of Cause and Effect.

The Law of Cause and Effect dominate our lives. Everything you want or desire is the EFFECT, and most people fall in love with the EFFECT.

All EFFECT’s are the result of some CAUSE – some action. The question for you is this: Will the CAUSE you are implementing produce the EFFECTS you desire?  Are you taking consistent and focused actions – the CAUSE – to get the EFFECT you want?

If you believe it will, then do not give up on it. It might take time, but if the CAUSE is the right one, then stay with it until or unless you have proof that there
is a better way.

It is so easy to fall in love with the desired EFFECT… i.e. getting rich, having a great relationship or a having a great body. That is easy.

What we should be doing, however, is falling in love with the CAUSE – the actions -all the things we should be doing to achieve the EFFECT. Visualization without action is delusion.

Don’t start worrying about whether or not you will achieve your long term dreams. Maybe you will and maybe you won’t. The much bigger thing to think about is this: Who will you become in the process of going for it. And, if you are doing the right things; doing the right actions on a consistent (daily) basis, the EFFECT will take care of itself. It is all a matter of belief.

We tend to only water the gardens we know that will grow – the gardens where we have planted seeds. We keep watering week after week, pulling weeds and fertilizing, because we believe that what we have planted will grow. If you have planted something, and you are taking consistent, daily action, then you are in the process of having what you want – the EFFECT.

So, make sure you are taking consistent and focused actions so that you get the results you are seeking. Everyone who is at the front of the line started out at the back of the line and the key to success is to get in line and stay in line.

I hope this tip serves you. I look forward to helping you reach for the stars!


Craig Haskell

Warren Buffett’s best investment? – the single-family home!

Warren Buffett’s best investment?  Now it’s the single-family home!

Warren Buffett, chairman and CEO of Berkshire Hathaway, is widely regarded as one of the world’s most successful investors. He recently appeared live on CNBC’s Squawk Box program, Monday, February 27, 2012, for his annual “Ask Warren” three-hour marathon. Among the many topics covered was the housing market. Here is Warren’s latest advice on investing in that area.

Buffett began by pointing out, “…equities are still cheap relative to any other asset class,” but added, “I would say the single-family homes are cheap now, too.” He then made this startling statement:

“If I had a way of buying a couple hundred thousand single-family homes… I would load up on them.”

He admitted that he would need a way to manage so many residences: “… the management is… really the problem because they’re one by one. They’re not like apartment houses.” But if it were practical, he would “load up on them and I would take mortgages out at very, very low rates.”

He then offered an insightful summary of the current situation in the housing market: “If anybody is thinking about buying a home — five years ago they couldn’t buy them fast enough, because they thought they were going to go up, and now they don’t buy them because they think they’re going to go down. And interest rates are far lower.”

Keying off the low mortgage interest rate situation, he pointed out:

“It’s a way, in effect, to short the dollar, because you can take a 30-year mortgage and if it turns out your interest rate’s too high, next week you refinance lower. And if it turns out it’s too low, the other guy’s stuck with it for 30 years. So it’s a very attractive asset class now.”

Buffett was then asked, point blank, if he were a young individual investor who had to choose between buying a first home or investing in stocks, which one would be the better bet? His characteristically direct answer:

“…if I knew where I was going to want to live the next five or 10 years, I would buy a home and I’d finance it with a 30-year mortgage and it’s a terrific deal.”

He followed that with this business idea:

“… if I was an investor that was a handy type, which I’m not, and I could buy a couple of them at distressed prices and find renters — and again take a 30-year mortgage — it’s a leveraged way of owning a very cheap asset now and I think that’s probably as attractive an investment as you can make now.”

And a final note: Buffett wrote in his latest letter to Berkshire Hathaway shareholders: “Housing will come back — you can be sure of that.”

Check out the video:

Is Your Real Estate Investment Structured To Lower Risks While Increasing Profits?

Is Your Real Estate Investment Structured

To Lower Risks While Increasing Profits?



cashflow from real estate investment

One of my most prized skills as a professional investor is my ability to sniff out amazing real estate investment opportunities and then engineer creative and lucrative deal structures to lower investment risks while increasing investor profits.

While choosing a strong market and property are certainly important pre-requisites to a successful real estate investment, I view individual properties as pawns in a larger game of financial strategy; the financial and ownership structures surrounding a real estate investment have more impact on my bottom line than the sticks and bricks in the transaction.   I’ve simplified some of these strategies into sound bites to help you do this.   Even though investing tends to be based on each investor’s personal investment philosophy than universal rules, I call these sound bites “Hassle-Free Cashflow Investing Rules” .  

Hassle-Free Cashflow Investing Rule: Buy what tenants want.

It’s a lot easier to purchase a real estate investment your tenant wants to live or do business in than it is to convince a tenant to want to live or do business in a property you already own.

In today’s buyer’s market, there are a lot distressed commercial properties that need to be repurposed to a higher and better use.  The economic collapse of the community banking business model as well as technological advances in online banking have resulted in a slew of vacant bank properties and very few banking tenants looking to lease them.    It would be a bad business plan to acquire a vacant bank and try to release it to another bank.  My partners and I recently acquired a vacant bank property we are converting to a Class A medical office building because that what tenants in this area are looking for. We started with the tenant and then located the property.  My team brought the active management / sponsorship / development resources to the project and several of my clients provided the passive equity for the project.

Hassle-Free Cashflow Investing Rule: Start with a real estate investment business plan not with a property.

Our business plan is to purchase vacant (bank) buildings and convert them into medical office.  Our real estate investment strategy was to identify a strong primary care physician group to be the anchor tenant and then go shopping for a desirable property together.  The anchor tenant physician located a vacant bank building in a fantastic location where he would love to locate his business.   The property is on a major thoroughfare with good signage visibility, close to a hospital and in a large population center. These are promising attributes for any medical office, but there were positive attributes about this particular property that appealed to the tenant which I would have never thought of.  First, the tenant needed a property that could easily accommodate ambulance access.  Second, the tenant wanted a property in a “health professional shortage area” (HPSA) with a specific HPSA score that increased the amount of government subsidies doctor tenants in this building would receive. If your HPSA score isn’t strong enough you may have difficulty attracting doctors to your building and you may have to lower your rents to do it.  HPSA scores change street by street based on census data.  In effect there is an invisible line down the street that says “this property is more valuable as medical office than the property next door” because of where the line is drawn.

Hassle-Free Cashflow Investing Rule: It’s essential for a prospective landlord to listen to their tenants and discover what they value most.

I steer new investors towards owning houses as their first investment because it is fairly intuitive to understand the amenities residential tenants will pay for and what they won’t pay for (number of bedrooms, proximity to jobs, etc.).  When you are in the world of commercial real estate, prospective tenants are fewer and their needs are more exact.   Instead of starting with a property, it can be much more lucrative to go shopping for a property with a prospective tenant or buy a property with a strong anchor tenant in place and fill up the surrounding vacancies with those types of tenants who have a proven history of success co-locating with your anchor.

Hassle-Free Cashflow Investing Rule: For a real estate investment partnership to be successful each partner needs to offer a resource the other does not possess.

The basis of my value proposition to the primary care “anchor tenant” looks like this:  “You become the anchor tenant in our multi-tenant office building and invite the doctors who receive your patient referrals to lease additional space.  My team will put up most of the money as well as the real estate skills needed to purchase a vacant property, redevelop it into a large multi-tenant office, and then manage the mechanics of the property and a complex financial transaction.  We each bring something unique to the partnership and we’ll co-own the property in partnership together.”   By partnering with my anchor tenant, I am 100% confident our building will have higher rents and a higher rate of occupancy than if I were trying to do this real estate investment on my own.

Hassle-Free Cashflow Investing Rule: Privacy can be a valuable tool in your real estate investment arsenal.

My anchor tenant physician located the property he felt was perfect for his practice.  It became my team’s job as the real estate professionals to negotiate a favorable price and terms with the seller.  We put on our best poker faces and made sure the seller did not know the identity of our high profile physician tenant by writing the offer in the name of an entity controlled by my team.  It appeared the seller was distressed because the property was vacant and the seller’s prospects for finding another bank tenant were slim, but if the seller knew who our tenant was our intended use of the property the price would have surely gone up.  It was easier for my team to negotiate aggressively with the property seller because we were not as emotionally involved with that specific property, as our anchor tenant was.

Although we had a property identified and an anchor tenant lined up, there were still miles and miles to go before we had a viable project.  It took a lot of time and resources for my team to develop financial forecasts based on rental income, operating expenses, redevelopment costs, availability and costs of capital, etc.   It took months to create architectural drawings and use those drawings to entice prospective tenants to sign binding leases in our property.  It took weeks to get our building permits and change of use permits approved by local government.  And then there was the financing!  A huge risk in purchasing any property in this economy is the availability of conventional financing.  A lot of banks that issue attractive terms sheets for commercial loans only to back out at the closing table, leaving you scrambling.

Hassle-Free Cashflow Investing Rule: Shift as many financial risks as possible from the Buyer (you) to the most motivated party in the real estate investment transaction (usually the Seller).

In our project, we were able to negotiate a four month escrow with the ability to extend the escrow an additional three months if required by our lender.  We used this extended escrow to complete all of our pre-development activities.  Architectural plans were drawn, leases were signed, permits were approved, guaranteed maximum price bids were solidified with our construction contractors, and we had time to shop the debt and equity we needed for this project.  Our long escrow period shifted all of our pre-development carrying costs onto the seller and more importantly we drastically reduced investor risk.  In the event we were unsuccessful leasing the building during the escrow period, we structured the purchase contact such that we could cancel with no penalty and thus dodge the bullet of purchasing a vacant, unleaseable building.   We eventually closed escrow on the property without ever putting a dollar of earnest money at risk and all of our architectural fees were paid at closing after we’d raised all of the capital through syndication!

This business plan worked out well and I am grateful to have a strong team and partners to work with which is why I can write this newsletter with a smile on my face, but not every real estate investment is smooth sailing.  I invest a lot of resources into real estate investment projects that never go anywhere; that is just part of the cost of doing business.  As a professional investor, it is my job to forecast where the hurdles of each real estate investment might be and determine the probability of clearing these hurdles while putting the least amount of capital at risk.

Hassle-Free Cashflow Investing Rule: Novice investors will make mistakes and that’s OK as long as you’ve started small.

A great place for new investors to start is the acquisition of like new construction, entry level single family homes purchased from a developer who offers a builder’s warranty and investor-friendly terms is. The process is not complicated, you can do your due diligence while putting little or no capital at risk, and the opportunity to learn from the experience is high while the risk is low.  This is more than a shameless plug for my homebuilding company that sells positive cashflow, like new homes with creative investor financing.  I really want you to take this paragraph to heart and not overextend yourself on your first few deals.  When you are a new investor, your first few deals should be as simple as possible so you gain experience, confidence, and a positive track record to set you up for future deals.  As you grow and diversify your real estate investment portfolio into more complex transactions, consider becoming a passive investor in group investments with sponsor who can mentor you through the process.  My first venture into medical office development was simply writing a check to another developer who did all the work and mentored me through the process.

You can read about real estate investing all you want, but until you’ve jumped into a deal with both feet, you’re still a newbie who doesn’t know what he doesn’t know.  If you want to lower your real estate investment risk while simultaneously venturing into potentially more lucrative ventures, let’s talk.  I am a teacher at heart and I love mentoring new and part-time investors.  If you are looking for a real estate investment to work hard so you don’t have to, my team can also help you become more of an armchair investor.

Regardless of your real estate investment style.  If you’d like help lowering your investing risks while increasing your real estate profits, please reach out to me and I’d be happy to help.

To your success!

David Campbell
Professional Real Estate Investor
(866) 931-9149 Ext. 1

Keyword: real estate investment

Keep the Receipt or Lose the Deduction

Record keeping – Keep the Receipt or Lose the Deduction

by Renee Daggett

Time after time, there are rulings from the IRS stating someone lost their deductions due to bad record keeping.

Karen Hough had to pay $100,849 in taxes because she “estimated” the business expenses. She relied on her testimony to prove the deductions, while the IRS required documentation. She did not have cancelled checks or receipts. The IRS could see she spent money, but because she could not prove the items purchased, the deductions were denied. There were no excuses.

I had someone ask me why they should keep their receipts when they charge all their business expenses on a credit card. The reason why you keep a legible receipt is that if you are in an audit, the IRS will NOT accept the line on a credit card statement saying you purchased items from Staples. They need the original receipt or a readable copy. If you don’t have the receipt, the auditor can say that you purchased school supplies for your kids and not believe you purchased office supplies for your business. The deduction would be denied. Do you save all your receipts? Do you copy the thermal receipts because they will fade after 2-3 years?

To keep your record keeping life as simple as possible, have one business checking account. Run everything through this account. This way you can track income and expenses in one place. I pay $1 a month to have my business checks mailed back to me so I don’t have to print copies of checks online. I know most banks go back months or even a few years, but if you are audited, it can be 3 years later and who wants to print each check online? Plus, I work with many banks and some don’t go back 3 years. I have had clients have to pay large bank fees to get copies of checks. No fun!

The IRS requires that you keep a log of your business miles. This includes starting and ending odometer, date, business miles driven and business purpose. Your calendar and your receipts will help indicate where you drove. Don’t forget to count your deposit runs to the bank!

You need to train yourself (and your staff) NOT to use cash. Cash is so hard to track. If you lose the receipt, you probably won’t remember what you purchased…thus missing a deduction you were allowed to take.

For meals and entertainment expenses, you are required to document who, where, when, why and how much. You have to indicate WHO you were with and why you entertained this person.

So how long do you need to keep your receipts? You can amend a tax return (or be audited) 3 years back. However, if you underestimated your income, the IRS can go back 6 years. If you did not file or filed a fraudulent return, the IRS can go back many years as they want. Also, if you purchase assets and they are depreciated over a period of years (5, 7, 15 years), you need the original receipt for that period of time.

Bottom line is that you need to PROVE everything you purchase for your business. Do you have written documentation that if you were audited there would be no change in the taxes due? I hope so!

Renee Daggett is the president of Administrative Bookkeeping Co., Inc. She received a bachelor’s degree from San Jose State University in 1989 and is an Enrolled Agent tax preparer (enrolled to represent tax payers before the IRS). Renee is also the author of “Your Financial Flight Plan: Pilot Your Business To Profitability.” In her book, she demonstrates in a creative way the reasons why every business owner needs to be a better manager of his/her business.

Renee Daggett, Enrolled Agent


Think of the investor mistakes you could avoid if losers gave seminars

I cautioned my son a hundred times about keeping his distance from fire, but not until he stuck his curious little finger into a candle flame did he learn the meaning of “Be careful, son. That’s HOT!”

Behind closed doors I’ve been known to say, “You aren’t truly an investor until you’ve lost it all and know how it feels to be a loser.”

Once you’ve experienced loss, you never want to experience it again. Fortunately, losing is an event, not a permanent situation.

“Risk adjusted return” is a theoretical concept to a newbie investor, but it is an indelible, searing reminder to someone like myself who has ridden the financial roller coaster up and down and back up again. Thankfully, the experience of loss is a lot easier to talk about when you are no longer broke.  As actor Mike Todd famously said, “I’ve never been poor, only broke. Being poor is a frame of mind. Being broke is only a temporary situation.”

I am fortunate enough to be on the teaching faculty with Robert Kiyosaki on the 2012 Investor Summit at Sea.

In Mr. Kiyosaki’s best selling book Rich Dad, Poor Dad, he tells the story of building a multi-million dollar nylon wallet company from nothing and then going broke. He went from multi-millionaire to living in the back seat of his car. I think we all know he’s doing pretty well for himself today.

The up and down process of wealth is a character-building and wisdom-building experience you can’t comprehend until you’ve lived through it. We’ve all heard stories of Wall Street bankers jumping out of windows because their entire financial portfolio evaporated over night. While I can relate to the immense sadness and self-doubt that comes from catastrophic financial loss, I can’t comprehend taking my own life over something so ultimately trivial as money.

Money is a vehicle that has the ability to take you to a lot of amazing places, but the vehicle itself will never bring you happiness. Appreciating the journey is only thing that will bring happiness, regardless of whether you are driving a Porsche 911 or riding the bus. When you truly comprehend that your net worth is not a measure of your self worth, then real wealth building can begin.

Like anything else, investing is a sport we learn by doing. If you want to become a professional investor, you’ll need to practice a lot and sometimes that means falling down. You can talk about investor theory until you are blue in the face, but until you’ve invested through an up cycle AND a down cycle you will make rookie mistakes like everyone else. It’s called seat knowledge and there is no way to avoid it. However, there is a way to mitigate it and that is to learn from an investor who has made and lost and remade their fortune again and is not afraid to talk about it.

One of those people is my friend, mentor and investment partner – Mr. Ken Gain. Ken has been a real estate investor for over 50 years!!! He was a millionaire in his 30s but went bankrupt at age 47 in the Alaska real estate crash. “That almost cured my real estate addiction,” he says. “But by getting back into real estate, I have again prospered”. He tells his investor clients that “my greatest value is that I have made almost every possible mistake but have still prospered. Think of what you can do by avoiding my mistakes”.

In this sixty minute free webinar with professional investors David Campbell and Ken Gain. We will do our best to help you learn these powerful investor skills:

1) how to identify investment opportunities and business relationships that will bring you future prosperity AND current happiness.

2) how to create financial abundance without ruining your health, happiness, and relationships to get it.

3) how to clearly identify what you want out of life so you will make better investment decisions


Ken Gain has been a real estate investor for over 50 years!!! He holds professional designations in appraising (MAI), syndication (SRS), commercial / investment real estate (CCIM) and real estate counseling (CRE).  He was a millionaire in his 30s but went bankrupt at age 47 in the Alaska real estate crash. “That almost cured my real estate addiction”, he claims. “But by getting back into real estate, I have again prospered”. He tells his counseling clients that “my greatest value is that I have made almost every possible mistake but have still prospered. Think of what you can do by avoiding my mistakes”.



Three Cashflow Ideas for Thriving During Rapid Change

Learn professional investor David Campbell‘s predictions for the US economy, and cashflow strategies to profit from an elongated recession and impending inflation.

IDEA #1: Learn and grow. Don’t cling to your parent’s or mutual fund sales person’s antiquated ideas about cashflow and money.

Imagine you’re applying for a job in computers. You’re confident. So what if the last computer skill you learned was in 1989? How much do things really change? Floppy discs, dial-up modems; you know your stuff! But then your potential employer wants to know about your proficiency with cloud technology, CRM databases, SEO optimization, and social media. Uh-oh…

Now apply this analogy to the world of personal finance.

The financial ideas that worked yesterday, last year, last decade, are completely ineffective in today’s economy. In today’s financial world, change is the only thing you can be certain of. You need to keep your financial knowledge current or the consequences to your cashflow can be unpleasant at best or devastating at worst.

cashflow from Investment Real Estate

IDEA #2: Savings are more important, but hording cash will bankrupt you.

Think of cash as milk. You always need some in the fridge, but it has a relatively short expiration date. The US government is doing everything it can to slowly and steadily erode the value of the dollar. Why slowly and steadily? If the value of the dollar is eroded too fast, there will be social unrest. If the value is eroded too slowly, US exports are too expensive in the global market and the cost of the US debt becomes unmanageable. The US can only afford to pay its debts if we pay them with devalued (inflated) dollars.

What does this means to you? While cash gives you a cushion against an uncertain job market, cash is steadily losing value. Make sure you’ve saved enough cash to shield you from an interruption in your income stream. However, once you have your cash security blanket in place, excess cash and non-inflation adjusted cashflow could be considered a LIABILITY because it is continually going down in value.

While the government is “targeting” a long term inflation rate around 2-3% per year, as consumers and businesses hoard cash during uncertain times velocity slows and monetary policy makers are “forced” to speed up the printing presses to compensate. The next round of TARP funds is already on the way to shore up real estate values and quadruple the cost of your groceries.

If you don’t have enough cash to grease the wheels of life you will certainly have a difficult time surviving. However, if your primary investment focus is accumulating cash reserves in savings accounts and CDs, you will get wiped out by the coming inflation.

IDEA #3 Create multiple streams of inflation adjusted cashflow.

Creating an inflation-adjusted cashflow stream gives you freedom, simplicity, and control over your finances. Investments that generate inflation-adjusted cashflow can avoid the ups and downs that give heartburn to investors focused on building a high net worth. If you own a valuable widget making machine but it isn’t turned on, you may as well not even own it. Focus on turning idle equity into cash flow. Turn pools of cash into streams of cash. There are a lot of “wealthy” people going bankrupt because they planned on selling assets with equity to cover their cash flow needs. But your grocer won’t accept an equity interest in your assets as payment; your grocer only takes cash. You never want to liquidate an asset because your grocery bill is due. You want to liquidate an asset when the marketplace tells you the time is right.

I meet people all the time who are struggling with cashflow and yet they rush to pay down their mortgage. When you pay down your mortgage, does your monthly cashflow improve? Absolutely NOT!!! Your loan will get smaller and you will save on interest costs, but that savings is not realized for decades (unless you refinance and amortize your debt over a longer period of time). Don’t try to solve a cashflow problem by turning useful cash into idle equity.

A client of mine once had a house worth $600,000 with a $480,000 mortgage. He made extra mortgage payments to get his loan down to $400,000, but then a funny thing happened. The house dropped in value to $400,000. Where did his equity go? Where did his cash go? BOTH GONE!!! Even though his mortgage balance was smaller his payments were the same. A much better solution would have been for him to leave his mortgage alone and take the cash intended for amortization and invest it into a cashflow investment vehicle. If my client had done this, he would have a $400,000 house with $480,000 of debt and an $80,000 investment generating cashflow. In both situations my client’s net worth would be the same, but in the latter solution my client’s cashflow would be radically better.

In the following free investor training video which is part one of a three part webinar series you will learn:

1) about currency devaluation, why it’s happening to you, and what to do about it.

2) why the global recession will get worse and which investments you absolutely want to avoid!

3) how to leverage these “interesting times” to your profitable advantage

I hope you are able to use these cashflow ideas to thrive during these times of rapid change.

Investment Real Estate and Einstein’s Theory of Relativity

To My Friends interested in Investment Real Estate

A highly simplified version of Einstein’s theory of relativity says that in order for low to exist, there must be also be high.  In order for Winter to exist, there must be Spring.  One extreme cannot exist without the existence of its opposite.  As the great Jim Rohn says, “How often does Spring follow Winter?  Every time! ”  This means that if we are living in an economic Winter, Spring MUST be around the corner.

cashflow from Investment Real EstateAs inflation and interest rates increase, rents are very likely to increase at the same rate.  If you acquire positive cash flow investment properties using today’s long term low interest rates,  your ownership costs should stay the same while rental income should increase with inflation.  Now is the perfect time to set yourself up to receive very high investment yields from positive cash flow real estate.

Investment Real Estate Money Making Action Items:

1) DO acquire positive cash flow properties with cheap long term financing.
2) DON’T sit on cash for too long as its buying power will soon be eroded with inflation.
3) DON’T sit out of the real estate market waiting prices to come down.  Interest rates are eventually going up and the cost of a $125,000 mortgage payment at 5% is LESS than a $100,000 mortgage payment at 6.75%
4) If you already own negative cash flow real estate with no equity, consider buying more positive cash flow properties using your currently good credit, and AFTER you’ve monetized your good credit, you can consider doing a short sale on your negative cash flow / negative equity properties.

5) If you own negative cash flow real estate WITH equity, consider using your equity as the down payment on a positive cash flow or neutral cash flow asset.  You can stimulate the sale of your property and probably achieve a premium price for it by being a buyer of someone else’s property. As a condition of purchasing the Seller’s property require that the Seller must purchase the property you want to get rid of.  This is called a “must take” in equity marketing and is a great way if you are trading up in asset value and adding cash to the transaction.  For example, if you have a $100,000 property that is negative cash flow but has $25,000 of equity, you can buy a $300,000 positive cash flow property by bringing in additional cash and financing to the table.   The person buying your property will get $275,000 cash and $25,000 of equity in your “must take” house.

I enjoy coaching investors. If you want to schedule a time to talk about your unique situation, you can book an appointment with me online:

Warm regards,

David Campbell
Professional Investor / Author / Real Estate Developer

Investment Real Estate Specialist

Are Passive Investments in Real Estate Right for You?

Are you looking for a simpler and more passive investing experience?  If you’ve considered being a passive real estate investor, this introductory video will give you some excellent ideas on where to get started as an investor in group investments (aka real estate syndications).

Not everyone is qualified to participate in a passive investing opportunity. You need some training to be able to make a good investment decision; you need a relationship with a strong sponsor / management team;  and you need a minimum amount of discretionary income and discretionary capital to invest.

However, if you have cash, cashflow, equity, or self-directed IRA funds to invest, passive investing in real estate can produce exceptional returns with a minimum of time and a minimum of hassle.

* Want to take advantage of today’s low interest rates, but can’t qualify for a loan?
* Want to earn while you learn about group investments, commercial property, and larger opportunities?
* Want to own profitable commercial property, but don’t have the skills or capital to do it on your own?
* Want to convert your future paychecks into a down payment today without having to sign on a loan?
* Want “forced equity” as part of your investing strategy, but are too busy or inexperienced to make it happen on your own?
* Want to own highly profitable and cash flowing real estate with a minimum of hassle?
*  Want the superior investment returns that  come from “needle-in-the-haystack properties”?

passive investing with hassle-free cashflow investmentsPassive investing in a real estate syndication is like owning stock in a small privately held company.  Imagine opening your mutual fund portfolio, and deciding to call up the fund manager.  Pretty unlikely that you can find his name, let alone his number.  Even if you could find his number, would he even take your call?!?!?  Most people are invested in stocks managed by nameless, faceless people on Wall Street.   Participating in a real estate group investment sponsored by a small, hands on company usually means you have a personal relationship with the people managing your money.  Isn’t that how it’s supposed to be?   I can empathize with the protesters in the “Occupy Wall Street” movement, because they feel totally disconnected and disenfranchised from their money and the people who have control over it.  One of my clients is a very conservative, Christian woman who was mortified to discover that her “financial advisor” (aka mutual fund salesperson) had been investing her retirement funds in companies that produced pornographic films.  The financial planner’s response was “I don’t know why you’re so upset, because your stock is up 20%”.  This client promptly moved her money into providing clean, safe, affordable rental housing and has been sleeping better ever since.


One of the best ways to regain power in your life is to understand where your money is invested, what it is invested in, why it’s invested there, who is accountable for watching over it, and when is your money coming back (hopefully with friends). 

Typically, the simpler the investment – the more likely it is to be successful.  Let me try out a simple one with you.  “People live or work in my property and pay me rent.”  Anyone with an IQ higher than a brick can understand that business plan.  However, as simple as it sounds, we all know that it takes an experienced and specialized team to help you execute the nuts and bolts of any business plan.   Owning real estate is a business. It has moving parts.  You have to manage people, income, expenses, and property.  Real estate can get messy and not everyone is cut out for it. 

However, if you want the advantages of owning real estate (and there are a lot of them) without getting your hands dirty, you should definitely consider passive investing in a group investment.   It is possible to own investment quality income producing, dividend paying, cash flow positive, institutional quality real estate without ever leaving the comfort of your armchair. 

Passive investing in real estate group investments can be an amazing vehicle to consider for:

1)  IRA funds

2) busy people

3) high income earners

4) foreign investors

5) those who can’t qualify for a loan

6) novice investors

7) hands off investors

8) people who want to earn while they learn

9) investors who want geographic diversity

10) investors who want property type diversity

11) investors who want to force equity but don’t have the time, skill, or relationships to do it themselves

12) investors looking to own a small piece of a “bigger” or “more interesting” deal


If you are intrigued by the idea of using your cash, cash flow, or equity to leverage:

* Other People’s Time

* Other People’s Skills

* Other People’s Relationship

* Other People’s Credit

* Other People’s Money

You need to watch this twenty-eight minute educational video.  There is nothing for sale on this video, but if you would like to talk about actually investing in a group investment, please call me, David Campbell, at (866) 931-9149 Ext. 1  or send me an email ( to schedule a time to talk.  In a 30-60 minute investor strategy consultation, we can help you determine if real estate group investments are an appropriate addition to your passive investing portfolio.

Is passive investing right for you?


Keyword: passive investing

Tax Planning Strategies for Real Estate Investors

Tax Planning … It’s not about how much you earn.  It’s about how much you keep! Learning how to legally avoid or defer the payment of income taxes is essential to your financial success.   Our world class faculty will show how real estate investors can legally earn more while paying less in taxes.  This webinar recording is suitable for experienced and novice real estate investors.


Tax Planning Strategies for Real Estate Investors

You will learn:

1) Urgent year-end tax moves every real estate investor must be aware of
2) How to take advantage of special 2011 tax deductions before they expire
3) How to get the IRS and your tenants to pay for a healthier retirement than you thought possible
4) Ways to ensure your self-directed IRA stays tax deferred
5) Which investments you should own personally and which investments you should own inside an IRA to optimize your tax advantages
6) How to identify and use your eight essential resources to legally earn more and pay less in taxes
7) Strategies to produce cash flowing real estate profits without the hassle and without the tax
8) Time sensitive legal considerations that could have a huge impact on your taxes



You can download the slides from this presentation HERE.

In this ninety minute free webinar, you’ll hear from:

  • professional investor / developer David Campbell

  • self-directed IRA company president Kaaren Hall

  • veteran tax strategist Amanda Han, CPA

  • real estate attorney Jeff Lerman

  • estate planning attorney Michelle Lerman

This webinar is appropriate for both new and well seasoned investors.   While this webinar will be recorded, you’ll get the most out of the experience by attending live so you can ask questions.   Sign up early because space is limited to just 100 participants.


DAVID CAMPBELL – professional investor / developer

As a real estate developer, investor, syndicator, and broker, David Campbell has been a principal or key advisor to over $800 million of real estate transactions including apartments, office, retail, hospitality, winery, condo-conversion, and production home building. David’s companies have held real estate interests in California, Texas, North Carolina, Delaware, Canada, Mexico, and Belize.
Believing that properties do not have problems, people do, David takes a people first approach towards finding creative solutions for properties and the people who own them.  David has a gift for implementing creative financial solutions. Starting with an assessment of an investor’s strengths, David finds ways to leverage those strengths to maximize profit while minimizing investment risk and minimizing hassle.

Kaaren Hall  – president of uDirect IRA Services

Kaaren has helped hundreds of people self-direct their retirement savings. A native of California, she has a 16-year background in Real Estate, Property Management and Mortgage Lending. She has worked at such companies as Bank of America, Centex Homes, Pulte Homes and Indymac Bank. She’s held a real estate license in Washington, Texas and California and a Life & Health license in California. Her company, uDirect IRA Services, LLC, offers self-directed education and services to investors, providing excellent customer service. Kaaren is a public speaker and master networker. A mother of two, she lives in Orange County.  Educating individual investors and professionals is the cornerstone of uDirect IRA Services. We have events right here in Southern California geared toward self-directed investing. We also offer webinars so no matter where you are you can “Learn to Earn”. uDirect IRA Services provides complete and accurate information on self directed IRAs so you can make the most of your retirement funds. We do not promote any investments. Rather, we provide the knowledge, tools and information you need to make self-direction easy. At uDirect, we help you get started quickly and easily, and stay with you every step of the way.

Amanda Han, CPA – tax strategist

Amanda Han is a tax strategist who specialize in creating cutting-edge tax saving strategies for real estate investors. As a real estate investor, Amanda and has an in-depth understanding of the various aspects of investing including taxation, deal structuring, entity structuring, and money-raising. Amanda is a frequent speaker and educator on tax strategies especially for real estate investors¬†and has recently been selected to be the Lead Instructor for the National REIA Organization teaching investors all across the nation on how to use taxes to significantly increase monthly cash flow. Amanda has also appeared on NBC News Radio as well as Realtor Magazine.  FREE DOWNLOAD of Mrs. Han’s ebook “How to AVOID UDFI Taxes when investing with Retirement funds”

Jeffrey H. Lerman – real estate attorney

One of the things clients say they most appreciate about Mr. Lerman is his ability to take complex legal concepts and information, synthesize it and present it in a way that allows an investor to make a good decision quickly. Mr. Lerman handles acquisitions and sales, entity formation, syndication, commercial leases, loan documents, construction documents, loan work-outs and litigation. Mr. Lerman frequently lectures on various real estate and litigation topics, has written numerous articles and has been featured in national news.

Michelle C. Lerman – estate planning attorney

Michelle C. Lerman is at the forefront of current developments in estate planning design strategies. A highly sought-after speaker in the community, Ms. Lerman has been helping clients with their estate planning needs for more than 20 years. She serves on many boards and mentors upcoming attorneys as well. At ease on the air or in the courtroom, Michelle C. Lerman has helped hundreds of clients with her creative solutions and solid advice about estate planning.


End of the Year Tax Planning Strategies for Real Estate Investors 

Copyright © 2011 Hassle-free Cashflow Investing, All rights reserved.

 We hope these strategies help you earn more while legally paying less tax.

Making Real Profits from Real Estate Knowledge Webinar Slides

Professional investor David Campbell shares real life examples of how he turns real estate knowledge into real estate profits by walking you through a multi-tenant retail center deal.  You’ll be blown away at how many creative investing strategies you’ll learn in this ninety minute FREE webinar. Find out how David Campbell uses creativity and his seven essential resources to put together a million dollar real estate transaction. This webinar is appropriate for both new and well seasoned investors.

Using a Self-directed IRA to Create Hassle-free Cashflow

Here are the slides from our webinar “Using a Self-directed IRA to Create Hassle-free Cashflow” presented by David Campbell and Kaaren Hall – CEO of
Professional real estate investor David Campbell and Kaaren Hall president of uDirect IRA Services share the philosophy, strategies, and tactics behind using a self-directed IRA to create hassle-free cashflow.In this webinar  you are guaranteed to learn:

1) what is a self-directed IRA and why almost every American needs one

2) how easy it is to set up and manage a self-directed IRA

3) how to make sure your self-directed IRA stays tax deferred for as long as you want it to

4) how to use your self-directed IRA to retire younger than you thought possible.

5) the pros and cons of owning real estate in a self-directed IRA

6) how to get the best financing for your self-directed IRA

7) the difference between UDFI & UBIT and how to minimize your tax bill

8) which investments should you own personally and which investments are better suited for your IRA.

The answers to these questions might surprise you. You’ll not only hear the perspective of self-directed IRA company president Kaaren Hall, but from professional investor David Campbell who has been using self-directed IRAs as a core part of his investing strategy since 2005.

This webinar is appropriate for both new and well seasoned investors.    You can experience the video recording of this webinar by visiting

Ten Reasons Why Savvy Investors Love Texas Cashflow Real Estate

Texas cashflow investingYou’ve probably heard lots of reasons why Texas cashflow real estate is attractive to investors, and here are ten more…

1. Texas cashflow real estate was less hurt by the Great Recession than the nation as a whole. Texas was still creating jobs when the rest of the economy had already started losing jobs in May 2008. Also Texas began posting positive employment growth 5 months before the nation as a whole.

2. Texas is the 14th largest economy in the world and 2nd in the nation (behind CA).

3. Texas added more people (nearly 4.3 million) than any other state between the US census counts of 2000 and 2010.

4. State demographers expect a population increase of 12 million in the next 20 years.

5. Texas private sector profitability ranks 13th in the nation. This means that businesses are able to retain more profits, maintaining cashflow and allowing for continued growth and hiring.

6. Texas produces more than 15% of all US exports.

7. Texas has no state income tax which is attractive to workers and businesses alike. Investors who reside in a no income tax states can avoid paying state taxes on Texas real estate profits.

8. The lower cost of living in Texas allows businesses to pay lower wages without affecting the quality of life of their employees. This cost savings allows Texas businesses to remain competitive in and outside of the US.

9. Housing affordability is 68% of the national average ($125,800) while rents for Texas real estate remain strong.

10. Texas ranked 10th in the nation for most entrepreneurs. This makes sense when you consider Texas consistently leads the nation in total number of jobs created and lowest rates of unemployment. Texas actively recruits (poaches) businesses from other states and countries through relocation incentives and tax subsidies for new businesses.

Texas is such a great place to invest, I couldn’t stop at just ten reasons. So, here are two more

11. Texans are more mobile than the rest of the nation on average. This is good for Texas real estate because a growing economy means a continual influx of new renters. This could lead to increases in higher rents in Texas cities like Dallas that are already facing land shortages near the major employment centers.

12. Recent increases in sales tax collections from business purchases, consumer purchases, and automobile sales signal that the Texas economy has emerged from the recent recession.

My favorite reason to invest in Texas cashflow real estate is the turn key investment opportunities offered by Hassle-free Cashflow Investing. 

Imagine guaranteed rents = success!

If this has your interest peaked, pick up the phone and give us a call to see if Texas cashflow real estate is what you’ve been looking for.  (866) 931-9149 Ext. 1

The statistics in this report come from the office of the Texas Comptroller as well as a report titled Nine Reasons to Invest in Texas printed in Tierra Grande which is published by the Mays Business School Real Estate Center of Texas A&M University.

Invest in Texas cashflow real estate and get Hassle-free cashflow from DAY ONE!

Part of our series of articles on investing in Dallas

Filling Vacancy is Key to Real Estate Profits

Filling vacant property in a timely manner is imperative to your success as a real estate investor.

The value of a commercial property is directly related to the value of the tenant leasing that property.  Most common cashflow problems result when a property falls vacant and the manager / owner is ineffectual at filling the vacancy.   Once you become skilled at filling vacant properties, you can direct that skill at filling other people’s vacant properties for profit.  There are a lot of commercial property owners and prospective investors who would gladly give you a piece of their equity in exchange for filling vacant properties with highly qualified tenants.

Here is my personal checklist to filling vacant property for profit:

  1. Identify your prospective tenant profile.
  2. Make the property physically rent ready
  3. Choose a competitive rent and security deposit structure (sometimes a tenant will choose your property over your competition because your deposit is more within his reach.
  4. Create professional-looking marketing materials which feature  ample photographs.
  5. Expose your marketing materials to the places prospective tenants are looking.
  6. Provide good customer service when prospective tenants call.
  7. Maintain a list of prospective tenant phone calls and call back prospects until they tell you they have leased another property.
  8. Implement reasonable selection criteria when tenants apply to rent.
  9. If prospective tenants are not calling you, go call them! Ask the neighbors for referrals.  If filling a commercial property, flip through the phone book or local trade associations and cold call for tenants (or have your leasing broker do this).
  10. If your vacancy is in a commercial property, consider starting or purchasing a business to become your tenant.  Often times purchasing a franchise and hiring a competent manager is cheaper than letting your commercial property sit vacant.
  11. If market rents have dropped below what is sustainable for your personal cashflow, invite your tenant to co-own the property with you in exchange for a premium rent structure; or take on an investment partner who supplements the negative cashflow in exchange for owning a piece of your equity.

david campbell property investorIf you are doing ALL of the above steps, your property should not stay vacant very long.  The exception to this is if the marketplace does not have enough demand drivers to fill the vacancy.  In that case, consider a change of use for the property.

Sometimes taking a property through a change of use is highly profitable; other times it is just a way to mitigate your loss on an investment burned by an unexpectedly changing local economy.  If there is no demand for housing in your area, perhaps your vacant residential property is better suited as a daycare facility, dentist office, drug rehab center, assisted living, etc.   If there is no demand for your vacant retail property, perhaps the property could be converted to vehicle storage, industrial distribution, refrigerated storage, data warehousing, or consider scraping the building and returning it to a previous agriculture use.

If your property is hopelessly vacant and there is no chance for profitable re-use, use this information to gain leverage with your lender.   If they see the situation the same way as you do, you might be able to negotiate a lower payment or principal reduction on your loan balance.

To your success,

David Campbell – Founder of Hassle-free Cashflow Investing
Real Estate Investor / Developer / Author
Office: (866) 931-9149 Ext. 1

Skype: HassleFreeInvesting

REMEMBER: Filling vacant property is an opportunity for profit.

Try on this recipe for financial success DFW style

Sales of existing DFW (Dallas – Fort Worth, Texas) single-family homes in August were up 24% from a year ago (aug 2010 to aug 2011), according to the most recent MLS data compiled by the Real Estate Center at Texas A&M University.  Sales in DFW (Dallas County) are up 31%.  Year over year median price is unchanged.

Increase in sales velocity is a leading indicator. Increase in prices is a trailing indicator.  (NOTE: we are seeing a leading indicator of potential price increases). 

The population of the Dallas – Fort Worth ( DFW ) metro is booming.

People are buying houses.    People are consuming houses faster than builders are adding houses.  Restricted land resources near job centers (yes there is lots of land, but not near where the jobs are),  tight construction financing, and stringent home buyer lending requirements are causing a major constriction in construction (say that 10 times fast!).

What happens when demand increases faster than supply?  Economics 101 = prices go up assuming there is capacity to pay more.

Homes are still very affordable in DFW with about 25% of household income being used for housing.

40% is about the maximum healthy allocation for housing.  This means residents of Dallas have an additional 15% of their income to use towards discretionary housing expenses.   This discretionary income allowance makes it possible for housing prices to go up.   Historically low interest rates are making housing even more affordable.   The majority of non-homeowners cannot get a mortgage because of tighter lending standards and credit challenges.   If lender underwriting gets looser or credit begins to heal with time, more home owners will qualify thus causing an increase in demand.

In the interim, high population growth combined with housing supply restrictions combined with strict lending guidelines is a recipe for RENT INCREASES.

Buy a new construction house in DFW and rent it out for positive cashflow.

1) If home buyer demand increases because of looser lending, PRICES will go up and you’ll make a capital gain profit.

2)  If home buyer demand decreases because of continued tight lending practices, RENTS will go up as the population increase puts further demand on the already limited supply of rental housing.

You win either way.

The team at Hassle-free Cashflow Investing would be happy to help you acquire a portfolio of positive cash flow single family homes in the the strongest rental market in the country – Dallas – Fort Worth, Texas.

Send an email to to learn more about how cash flowing houses in DFW could fit into your personal investment strategy.

Part of our series of articles on investing in Dallas

David Campbell Named Value Hound of the Month

Below is a summary of David Campbell’s Interview with Craig Haskell of the Value Hound Academy.

You can listen to the Full Audio Interview HERE

How a High School Band Teacher Became a Successful Real Estate Investor by Turning Distress into Profits as a Creative Deal Maker

While a high school band director in Southern California, David bought his first investment property – a two bedroom condo. As the market value went up, he sold the condo and took the equity to buy more properties. Success really took off when David bought a 30-unit apartment building and converted the units to condos where he sold them for a sizeable profit.

Since his days as a school teacher, David has been a principal or key adviser to over $800 million of real estate transactions. Because of David’s success, he has been in high demand as frequent guest speaker at numerous events, radios shows, and leading universities.

Believing that properties do not have problems, people do, David takes a people first approach toward finding creative solutions to properties. David’s unique gift is finding creative solutions to getting deals done, and in this interview, he shares some exclusive samples of his most creative deals.

Value Hound – You came from very humble beginnings as a high school band teacher. Today, you’ve built a sizeable international real estate investment company. Tell us how you got started and built your company.

Campbell – I started out teaching high school band, and my salary was less than $30,000 a year. Living in southern California, I figured out really quickly that was not going to be enough money to raise a family on, so I started looking for something else in the marketplace, and how could I make some ancillary income. Fortunately, in college, I worked at a mortgage brokerage office and a tax office, and I had a good financial background.

I went out, and the first thing I did was I bought a two bedroom, two bath condo, and I lived in one half, and I rented out the other half. Lo and behold, the first year, equity happened to me, and the property went up more than what my salary was. At the end of the first year, I said, “Look, I’ve got no money in my checking account, but suddenly I have a $30,000 net worth because of real estate that would not have been there any other way.” And that got me the bug.

I took that first concept and learned how to equity optimize and I pulled the equity out of that property, and I bought another house, and that property did well for me. And I bought four more houses, and those did well. So I doubled down and got eight more houses, and then got into an apartment building, and then I really got the bug for real estate development.

I started a home-building company and a commercial renovation company. We buy distressed shopping centers and fix their problems. I got the bug to go international. I looked at the Caribbean and Mexico and Canada, and some pretty viable places to invest, and it was just something that grew organically from a humble start with no capital, and really relying on my creativity and ingenuity, and relationships to really kind of bootstrap my way into a pretty healthy real estate company.

Value Hound – Were there one or two big things that really propelled your success?

I would say the first thing is just looking to give first, and realizing that the pie is big enough to share, and if you always lead with the question, “How can I add value to you?” or “How do I add value to the marketplace?”

In boom times, dumb people can make money just because the market’s going crazy. But in lean times, like we’re in now, many times you’ve got to be really smart, and you have to have some loyal people around you.

The most important thing in my business is to have integrity with the people who are on your team, add value to them first, and if they return value to you, then they’re a keeper. You know, they’re part of your team for life, and if you add value to them, and they just take and don’t return value, then you just say, you paid a little bit to learn that you just need to move on and find some new relationships.

The second thing is really just keep your eyes open for opportunity, and be, in many cases, have a good filter. I like to say that if you’re crystal clear on what you’re looking for, then the strategies and the tactics to achieve that objective are going to make themselves apparent to you. And it’s a great opportunity to just look for ways to find value, and the universe just gives back to you.

Value Hound – As you’re out looking for opportunistic and value-add deals in the distressed marketplace, what types of deals are you looking for?

Because my primary business is home-building, I am looking for sellers of land that are going to give me great terms because I’m a huge believer of the concept that terms are more important than price, and I’ve heard the story told many, many times: you name the price, and I’ll name the terms.

What I’m seeing in the marketplace is a lot of landowners, where they’re stuck on price, and my thing is terms, so I’ll say, “I’ll give you your price on your dirt, but what I want you to do is, number one, subordinate your equity to my construction loan; number two, give me a long take-down schedule on your lots.

If you’ve got 100 lots, instead of me buying 100 of them and paying interest and taxes and mowing and all of that while I am unable to use them,” go to the seller and say, “I’d like you to give me 3 lots a month, or maybe 2 lots a month for the next however many months it takes.”

The other thing I’m looking for is opportunities to trade equity. You know, find someone that has a property with equity in it, and trade it for a different property type that makes sense for you and solves their problem, or finding ways to solve a seller’s challenge by creativity.

I recently acquired a large commercial property in Dallas. It’s a former retail center and we’re working on changing use from retail into vehicle storage and a vehicle service center. That’s a very recession-friendly type of business. Everybody’s still driving, so they need a place to get their vehicles worked on, and I realize that retail is never coming back in this location, but a change of use was a great way for me to get income from the property that the seller hadn’t thought of. So I was able to buy property at an extremely great price and change the use of it and make a profit.

People  are afraid of big boxes now because they don’t know what to do with them, and if you can get the building cheap enough, then it really opens it up to so many different uses.

Let’s say in a retail space, you might have spent $100 or $120 a square foot to buy it as a retail center, but the retail is dead and gone. The building is vacant and maybe if you can buy it for $10 or $20 a foot, which is way, way, way below replacement cost. Now, when your basis is $20 a foot, there are all kinds of uses that make sense there that didn’t make sense before, when it was $100 a foot.

Value Hound – I look around this country, and I see all of these vacant, boarded-up, former auto dealerships that are just sitting empty; there’s got to be some great uses for those empty buildings. Have you ever looked into that?

Campbell – Yes, and in fact, I’m actually partly contributing to that problem. I’m recently trying to aggregate a bunch of small auto dealerships into a single location because a lot of dealers have gotten smaller; they need less floor space, and they want to finally trim their overhead, and so by creating an auto center of multiple dealers. Maybe you can get 7 or 8 or 10 used car dealers into that same space, and then have shared overhead for office and financing and your title processing and things like that. So that could be one potential use.

The other is, when you’ve got lots and lots of land, you could either just look at doing a demo project and starting over. I’m working on a project now where it’s something similar to an auto dealership with good freeway frontage, and we’re working on making it into a truck stop. Where the former sales room was, you can put your showers and restaurants and things like that, and then all of the places where the cars used to park is a great place for the trucks to go.

The current distressed real estate market has created many vacant office buildings, vacant big box retail space, unsalable land, empty car lots, empty warehouse space, and much more. How can an investor creatively solve the empty space problem?

I’ve had great success starting with the property I owned or wanted to acquire, and setting up a meeting with either planning department, city council, city manager, head of economic development, or chamber of commerce. You say, “I’m the owner of the property at Main and Main and I’m having trouble with my property. What would you recommend? What would you like to see me do with the property? If you owned this property, what would you do with it?”

It’s amazing the uses that come out. Because oftentimes, a city will have a tenant that approaches them and says, “Hey, I’m a manufacturing person, and I’m looking for….”

I’m working on a deal right now where I’ve brought my property to the city, and I wanted a particular use, and the city said, “Well, that’s interesting, but we’re right now courting an industrial – manufacturing tenant that would really like to have a site similar to yours. Let’s make an introduction.” And that’s great.

I never would have had that connection or thought to convert – in this case, it was a retail property into an industrial property. But with the city’s introduction that was a good indication to me that I would get my change of use permit. Maybe – in this case, I did not need a zoning change, but perhaps, if I did, having the city initiate the project is sure helpful because then you can say, “Hey this was your idea to start with. Give me some support.”

Value Hound – Any other examples you can tell us about?

Campbell – I worked on an interesting project where it’s some city-owned land, and I really didn’t know who owned this land. I just thought it was a really great parcel, and I looked it up in the tax records, and lo and behold, it was owned by the city.

Knowing the city’s mission statement, I was able to get a good feeling for what things they’re proud of. I then went to that city and said, “What would you like to do with this land?” They said, “We have no idea.” And I said, “Well, you know, reading the mission statement of the city, I think this could be a good use.”

I proposed something that was ecological and green and helpful to the community. That’s a project in process, but that’s a great way to get into a project. In this case, I am asking the city to give me great terms on their land; maybe give me some special financing – some bond financing – and you never know what you can get if you’re putting your brain, your team and your intellectual resources behind something.

One of my mentors very early on said, “Never let the lack of capital stop you because if your deal is good enough, your idea is good enough, your team is good enough, the money will find you.” And that was a really freeing thought.

In this particular case, the gentleman said, “David, if you can’t fund your deal yourself, and it’s good, you come to me, and I’ll fund it.” And that was liberating. It was so liberating for me that I just stopped worrying about the money, and I just started worrying about – does it make economic sense? And if it does, someone will write the check.

Value Hound – You’ve been quoted as saying, “Properties do not have problems; people do.” Can you explain your philosophy and tell us how investors can capitalize on that?

Campbell – It goes back to understanding that the way to create value is solving problems, and every property is an opportunity. Sometimes it’s an opportunity for the buyer; sometimes it’s an opportunity for the seller. Really, if you ask great questions and you listen, sometimes you’ll find a way to create unique deal structures.

For example, every time someone is offering a property for sale, 100% of the time, that person has a need. Sometimes the need is to sell the property, and sometimes it’s not. Sometimes, what they’re really trying to solve is a need for cash. Sometimes they’re trying to just solve a management hassle. Sometimes it’s an inheritance issue, where they inherited a property, and they just don’t have the resources or inclination to continue managing it. Sometimes, their debt has expired and they have a balloon payment due, and can’t make it.

Value Hound – What other types of creative deal structures are you working on today?

Campbell – I’m putting a deal together where I’m trading a portfolio of notes that I created in exchange for a down payment on a medical office building. It’s a situation where the seller really would like all cash, but there are no buyers in the marketplace for his property using all cash, so I can come to the table with a 75% bank loan, and 25% cash down payment with the requirement that he then use his cash down payment, after close, to purchase my notes.

So basically, we can do a double escrow: I can sell him my note portfolio; he can sell me his property. In a sense, it’s an exchange, where we’re exchanging equity for equity, and it’s a way for me to get out of a note without discounting it. Most people would say, “Hey, you’ve got a note, and you want to get the cash? Well, go sell your note at a discount, and get your cash, and then go to the seller and give them your cash.”

Value Hound – What big mistakes are investors making when they’re trying to put together and structure deals?

Campbell – I think the first thing is not understanding the life cycle of cash, and saying, “Well, I’m going to put my cash into a deal,” without thinking about when they’re going to get that money back and how they’re going to get it back. I’m a huge believer in knowing when and how you’re going to sell the property before you buy it, or making the assumption that you’re going to buy it forever – you’re leaving it to your heirs.

So Rule No. 1: have an exit strategy before you buy. And the exit strategy isn’t, oftentimes, for the property; it could just be for your equity. That’s what I like to teach – you buy the property, get your equity back out, and keep the property. I really am a big believer of that, so if people are having a different strategy on real estate investing, I’m always curious to look at what their cash and cash return is when they leave their money in long-term.

You say, “Well, it’s nice if you’ve got a bunch of free and clear property, but what is your cash on cash return compared to, say – let’s say we pulled out 50% of that equity – conservatively – and we doubled the size of your portfolio. Then what would happen to your cash on cash return.

The second thing that is a huge mistake investors are making is not having a support team around them. I see people – oftentimes, they try to go it alone in a marketplace, or they assume that a group of professionals is too busy to take their phone call, and they just kind of muck it on their own. Or they try to just go around people and be secretive with their team.

It’s very much like going to your doctor and just saying, “I’d like some penicillin.” And the doctor says, “What’s wrong with you?” And they say, “I just want some penicillin. Give me some penicillin. It’s none of your business why I want penicillin. Just give it to me.”

I see investors make that kind of mistake in the marketplace, where they’re afraid to open up about what their personal investment philosophy is; what they’re really trying to buy. People don’t like to be sold, but people love to buy. I really encourage people to get a team around them, and then to say, “My personal investment philosophy is,” and then they can be very articulate about what it is.

There’s an infinite number of properties in the world, universally, and there’s no way you could look at all of them. You have to have search criteria, so when you go on the MLS and there’s six million properties in America for sale, how do you narrow that down to the one you’re going to buy? It’s simply by having good filters and making sure that your filters are consistent with your long-term vision.

Thirdly, I think, is insufficient cash reserves. Oftentimes, someone has $30,000, and they say, “All I need to buy this property is 30 grand,” and they put it all in. Then, the first cash call comes because they’re vacant or there’s a repair, and then they lose control over the property. I would much rather have – if I could choose between putting 20% down and having no money in the bank, or putting 5% down, and having 15% in the bank, I would much rather have the higher leverage and the greater cash reserves.


David Campbell would like to thank Craig Haskell of the Value Hound Academy for facilitating this interview.

Relocate America ranks Dallas, TX as the #5 Best City to Live in America

While you know I am a fan of Dallas, TX as a great market to own rental property in, it is also a highly desirable place to LIVE.

Each year researches, identifies and shares the best places to live in America. For 2011, the team found the best communities that are well positioned for economic recovery, already experiencing strong economic recovery or have proven overall economic stability. Factors such as employment, education, community leadership and overall quality of life are strongly considered and all the data is examined to determine the Top 100.

In 2011 Dallas was ranked the #5 Best Place to Live in America (Austin, Texas was #1)

Dallas Real Estate Investor Field Trip 2011

The following is a reprint of the article posted at:

Dallas, a richly diverse city, offers a thriving culinary scene, a leading arts district, countless luxury accommodations, professional sports, trendy entertainment districts and endless shopping opportunities. As the Southwest’s leading business and financial center, we boast the largest wholesale market in the world, and lay claim to being one of the top convention cities in the United States.

Despite economic downturns in other cities across the country, the City of Dallas continues to experience sustained economic development and growth, especially in our expanded downtown neighborhoods and Southern Dallas business parks. Dallas is renowned for its commercial drive and cosmopolitan flair. With its concentration of high-tech companies, corporate headquarters and wholesale trade markets, it’s a metropolis devoted to business. Dallas also claims one of the largest urban arts districts in the U.S. and is a magnet for top scientists and doctors, including three Nobel laureates.

We have focused on the development of downtown Dallas over the past few years, to reach our goal of making downtown a 24-hour neighborhood. Downtown Dallas is glitzy, with several arts and entertainment districts nestled amid its futuristic corporate skyline. In 1999, about 500 people were living in the central business district. Today more than 3,700 call downtown home. Dallas is a leader in transit-oriented development, which provides new housing, adds sustainable density to accommodate the continued projected growth, provides new retail, employment and entertainment anchors for many of Dallas’s single-family neighborhoods, it improves mobility and energy efficiency. And Dallas boasts a moderate cost of living, well below major East and West Coast cities.

Dallas is a richly diverse American city, home to people with many cultures, religions and lifestyles. This important convergence of uniqueness and differences is reflected throughout the sights and sounds of the city. Dallas’s authentic arts, music, food, places of worship, historic landmarks and urban lifestyle all contribute to the city’s makeup. Historic buildings also contribute. Built in 1921, the Majestic Theater is wonderfully restored with all of its charm and features sight-line seats, and state-of-the-art stage, sound and lighting equipment. Programs include musicals from the Broadway Contemporary Series, and the Dallas Black Dance Theatre.

The City of Dallas has been “going green” for many years, even before the green movement was in fashion. In fact, our Office of Environmental Quality racked up so many green initiatives and accomplishments over the past two decades that the Regional Director of the U.S. Environmental Protection Agency called Dallas “a leader among cities,” standing ready to be a model for the rest of the nation. Out of all U.S. cities, Dallas is the Number 1 purchaser of clean, renewable power; Dallas boasts the largest alternative-fueled fleet in Texas and one of the largest in the nation; Dallas has been chosen as the first and only pilot city for the EPA’s Sustainable Skylines Program aimed at improving air quality.

The Dallas Park and Recreation department maintains more than 400 parks, including 17 lakes, more than 17,000 acres of greenbelt/park land, and more than 61 miles of jogging and bike trails throughout the City. We are reinvesting in neighborhood and community parks, developing two new major athletic complexes and adding 15 miles to our city-wide trail system. Through a public-private partnership, we are building a 5.2-acre park on a deck over Woodall Rodgers Freeway, designed by renowned landscape architect James Burnett.

Currently the freeway and overpasses prevent movement between our growing Arts District and our Uptown area, whose explosion of residential and retail growth has made it the hippest place to shop, eat and live in Dallas. When the park is complete it will include a children’s garden and playground, a dog park, cafe and outdoor terrace, acoustical performance stage, plazas and water features, shady groves and lawn space and wireless Internet access. It will finally connect the Central Business District and Uptown, and promote walkability and livability between two of the city’s most vibrant entertainment and cultural districts. We are also embarking on a significant restoration and enhancement of Fair Park, a National Historic Landmark with the largest collection of Art-Deco buildings in the nation, and transforming the river into our city’s front door, a spectacular showcase of nature, recreation and innovation with a signature bridge designed by Santiago Calatrava.

Of course, we take our sports seriously in Dallas. Whether it’s professional basketball, college football or a raging rodeo, on any given day you can find a spectator event that suits your particular appetite. The Dallas Cowboys play football in the largest domed stadium in the world, with the world’s largest column-free interior and the largest high definition video screen which hangs from 20 yard line to 20 yard line. The Texas Rangers play major league baseball in The Ballpark in Arlington, about 15 miles to the west. NASCAR racing can be seen at the Texas Motor Speedway north of Forth Worth. Two professional golf tournaments are held in the Dallas-Fort Worth area every May.

The City of Dallas is focused on doing everything possible to create and maintain a vibrant and growing economy. Business opportunities. Quality, affordable housing. Higher Education. Arts and entertainment. Friendly neighbors. Dallas a city that models its slogan, “Live large. Think big.” Its pioneering spirit is alive and well, and the contributions of its residents continue to enrich the community and quality of life. More than 500 people move to the greater Dallas area each day from every part of the nation and the world for reasons as varied as they are. But the fact is that Dallas is big enough for all of them.

Part of our series of articles on investing in Dallas

Consumer Spending in U.S. Unexpectedly Stagnated in May as Prices Climbed

(The following is a reprint of an article from Bloomberg on consumer spending and inflation with  commentary from professional investor David Campbell inserted in (italic parenthesis) as a way of interpreting this article within the context of Hassle-free Cashflow Investing. Your blog comments are also greatly appreciated.)

consumer spending 

By Alex Kowalski – Jun 27, 2011

Consumer spending unexpectedly stagnated in May as employment prospects dimmed and rising inflation caused Americans to cut back.

(It is important to note that the title and general theme of this article is that consumer spending stagnated not declined.  This means that even though prices have gone up, it has not had an impact on the amount Americans are spending. Inflation is the effect of rising prices resulting from increased supply of currency and increased velocity of currency.  If the supply of currency has increased but the velocity – consumer spending – has stayed the same the result is inflation.   Some experts are hoping that inflation can be kept in check by a reduction of consumer spending – reduced velocity. A decline in consumer spending would  retard inflation in the short term, however while the supply of money can expand to infinity consumer spending can only retract so much. Eventually, the pent up demand for goods – consumer spending – will result in increased velocity which will compound the effects of inflation. )

Purchases were little changed, the weakest outcome since June 2010, after a revised 0.3 percent gain the prior month that was smaller than previously estimated, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.1 percent gain. Prices excluding food and energy rose more than forecast.

(As prices increases occur, the government must increase the supply of money to pay its own bills which creates a parabolic rate of inflationary price increases.  Very few economists have the hutzpa to publish forecasts showing inflation increasing at parabolic rates.  Most people see 0.3% gain per month and they think “no big deal”.  This is because most people are bad at math.  Using 0.3% per month COMPOUNDING rate of inflation an item costing one dollar today will cost $16.91 in 78.7 years – which is the average life expectancy in the US.  This rate of growth equates to 21.5% simple / non-compounding growth rate.  If Americans knew 0.3% monthly compounding inflation was really a 21.5% hidden TAX on their life, there would be rioting in the streets. In order to make money as an investor, you need to own inflation friendly assets.  Nominal gains from dollar denominated asset classes are almost always entirely eroded by inflation.  To beat inflation, you MUST own leveraged, income producing real estate. There is no other asset class whose equity and income will track with inflation).

Walgreen Co. (WAG) is among retailers that indicated 9.1 percent unemployment and higher gas and grocery bills have prompted shoppers to pare back purchases of less essential goods. Federal Reserve policy makers said the restraint on purchasing power may prove temporary as commodities prices start to decline, allowing the economy to pick up later this year.

(How can the Federal Reserve predict declining commodity prices? The Fed controls the money supply which is one half of the equation in pricing. Remembers inflation is supply x velocity.   The Fed controls supply but they don’t control velocity. If the Fed says commodity prices will decline, is the Fed saying they will remove money from circulation?  If the Fed removes money from circulation, wouldn’t that radically impair the economy? The government is in a catch 22 of having to continually expand the money supply or stop printing money which would result in a 3-10 year economic depression – which would be political suicide.  If the Fed believes purchasing power – velocity – will increase, that is an inflationary pressure in itself.)

“The quarter is going to be very slow,” said Christopher Low, the chief economist at FTN Financial in New York who correctly forecast household spending. “The biggest explanation for that is gas prices, so obviously the fact that oil has fallen quite a bit in the last couple of weeks is a really good thing. Relief just in time.”

Stocks rose as banks gained on new rules to safeguard the global financial system and technology shares rallied. The Standard & Poor’s 500 Index rose 0.9 percent to 1,280.1 at the 4 p.m. close in New York. Treasury securities fell, pushing the yield on the benchmark 10-year note up to 2.92 percent from 2.86 percent late on June 24.

(When treasuries or treasury bonds ‘fall’ it means the purchase price of the bond is discounted which pushes the yield up.  Investors demand a higher yield when they fear inflation will erode too much of their profits.  If the inflation rate is 0.3% per month compounding, that is 3.66% per year.  If the yield on treasuries is 2.92% and inflation is 3.66%, the effective yield on treasuries is NEGATIVE 0.74%.   You can make money TRADING treasuries and you can hold them as a LIQUIDITY alternative to cash, but only the financially illiterate actually purchase treasuries as INVESTMENTS.)

Survey Results

Estimates from 70 economists surveyed by Bloomberg ranged from declines of 0.3 percent to gains of 0.3 percent after a previously reported 0.4 percent gain the prior month.

The report showed incomes increased 0.3 percent for a second month. The gain was also less than forecast.

Wages and salaries increased 0.2 percent in May after climbing 0.4 percent a month earlier. Disposable incomes, or the money left over after taxes, were up 0.6 percent from a year earlier after adjusting for inflation, the smallest 12-month gain since May 2010.

Because incomes rose as spending stagnated, the savings rate rose to 5 percent from 4.9 percent in April.

Today’s report also showed inflation picked up from a year ago. The gauge tied to consumer spending patterns increased 2.5 percent from May 2010, following a 2.2 percent gain in the 12 months ended in April.

(As one would expect, it appears that wages are keeping pace with the cost of living.  Wages shouldn’t be going up during a very tough labor market, however because of the radical increase in the supply of currency the inflationary trend has found its way into wages as well.  As wages go up with inflation and the price of real estate stays the same it makes real estate relatively cheaper.   A one dollar an hour increase in wages results in an additional $12,500 of mortgage buying power for the typical consumer.   The article points out that the saving rate is increasing, which means there is a lot of cash sitting outside of circulation in our economy.  Increase savings rates slows inflation because it slows the velocity of money.   Pent up consumer demand for housing combined with increased borrowing power and savings rates means there is the potential for another real estate boom. One of the major obstacles preventing a real estate boom is widespread poor consumer credit is preventing financially qualified borrowers from getting loans.  If you hear about easing credit standards for real estate mortgages, you’ll know the next real estate boom is about to take off.  Smart investors will acquire a portfolio before that happens and then enjoy the price escalation which will result from the above factors.)


More Inflation

The Fed’s preferred price measure, the so-called core inflation reading that excludes food and fuel, rose 1.2 percent in May from a year earlier, compared with the 1.1 percent advance in April. It rose 0.3 percent in May from the prior month, the biggest one-month gain since October 2009.

Today’s report also showed that spending adjusted for inflation figures, which are used to calculate gross domestic product, dropped 0.1 percent for a second month. It was the first back-to-back decline in two years.

Economic growth slowed in the first quarter after surging energy costs strained consumer finances. Labor markets have begun to worsen this quarter, with payrolls growing by 54,000 workers in May, the fewest in eight months. Unemployment rose to 9.1 percent, the highest this year, the Labor Department showed June 3.

“Persistent high unemployment, a weak housing market, high fuel prices and inflation all put pressure on consumers,” Greg Wasson, president and chief executive officer of Walgreen, said on a June 21 earnings call. In response to the economic outlook, customers of the largest U.S. drugstore chain are shifting more spending to essential goods, he said.

Raising Prices

The Deerfield, Illinois-based company has been raising prices to combat more expensive input costs, including fuel, Chief Financial Officer Wade Miquelon said during the call.

In May, cars and light trucks sold at an 11.8 million annual rate, the slowest since September and down from a 13.1 million pace a month earlier, according to researcher Autodata Corp. Some of the drop in demand last month reflected a shortage of Japanese-made vehicles after the earthquake and tsunami in March disrupted supplies. With inventories running low, companies offered smaller discounts, deterring buyers.

Fed officials decided last week to keep the central bank’s balance sheet at a record to spur the slowing recovery after they complete a $600 billion bond purchase program by the end of this month.

“The economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the committee had expected,” Fed Chairman Ben S. Bernanke said at a press conference after a meeting of the Federal Open Market Committee on June 22. He said the slowdown is caused in part by “factors that are likely to be temporary,” including more expensive commodities as well as supply chain disruptions associated with Japan’s natural disaster.

(The actions of the Federal Reserve and the US Government encourage American’s to cut back spending which is a slowing of velocity.  When consumer spending (velocity) slows, the government has the ability to increase money supply – thus increasing government spending – without resulting in price increases.  Increased money supply and reduced velocity benefits the government because they have the opportunity to spend new money first when it has the most purchasing power.)

Gasoline prices have fallen about 11 percent through June 26 after reaching an almost three-year high of $3.99 on May 4, according to data from AAA, the nation’s largest auto group.


®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED. Here is a link to the original article as printed by Bloomberg: ” Consumer Spending in U.S. Unexpectedly Stagnated in May as Prices Climbed “

Managing your expectations is a prerequisite to getting paid

The following article on managing expectations was written by professional investor David Campbell for a publication distributed to professional real estate agents (Realtors).

Real estate is a people business.  Unfortunately, the people responsible for paying our livelihood don’t usually understand real estate.  Often times, concepts which are incredibly obvious to real estate professionals are completely oblivious to our clients.  Your livelihood depends on your clients having a positive experience and giving you their referrals.  I am sure you have seen agents do a terrific job managing the technical aspects of a transaction only to have an unhappy client at the closing table.   The reason was there was something that the client expected that he didn’t get.  Sometimes we can listen to the client’s expectations and find a way to deliver the thing they are asking for.   Other times it is more appropriate for us to help our clients recalibrate their expectations.

In my real estate business, I work exclusively with real estate investors. Some of my clients own multi-million dollar portfolios while others are in the process of buying their first rental property. One of my novice investor clients recently sent an email to their professional property manager regarding the lease renewal on one of their rental properties.  They copied me on the following email: “The current rent of $1,300 per month is very close to our breakeven point, so we can not go any lower.  More rent would be nice, but not at this time.”

Upon receipt of the email, I contacted my client with the following advice:

“Always price your rent at market rate regardless of what your personal expenses are.  A professional property manager will help you establish the appropriate rental rate.  If the market rent has gone from $1300 to $1,400 OF COURSE YOU SHOULD CHARGE $1,400 RATHER THAN $1,300.  If the market rent has declined to $1,200 and you keep your asking rent at $1,300 because that is what your expenses are, your property will sit vacant and you will feel stress.  Always price your rent at market price. Take your profits when the market lets you. Suck up your losses when the market forces you to.  Market price is set by the economy not by your financial need.  Your tenant will never care how big your mortgage payment is.”

A client who prices their property with the guidance of a professional will have set their expectations for success.   A client who sets their own price for a property based on personal need will eventually feel the stress of the marketplace rejecting their property at that price.  Inevitably the property owner will blame their realtor for not meeting expectations, when the problem was the client’s expectation was wrong from the outset.

Here is another maxim to run your business by:   “If you aren’t going to get paid for your work, you might as well stop working right away.” If your client has set themselves up for failure by focusing on their personal need while simultaneously ignoring the needs of the marketplace, you should counsel your client to establish more appropriate expectations, or fire your client and move onto the next deal.

To your success!

David Campbell
Professional Real Estate Investor, Developer, and Broker
(866) 931-9149 Ext. 1


PS.  I look forward to helping you set and achieve reasonable expectations for your investment real estate objectives.

The Ultimate Commercial Loan Workout Symposium

I hope you can join me, David Campbell, as I present powerful information on a panel with America’s premier minds in commercial real estate at

The Ultimate Commercial Loan Workout Symposium.

Wednesday, July 06, 2011
from 8:30 AM – 5:30 PM (PT)
Los Angeles, CA – Four Seasons Hotel


Featuring ten nationally renowned experts including Master Real Estate Investing Strategist and Founder of Hassle-free Cashflow Investing Mr. David Campbell.

david campbell: presenter at the ultimate commercial loan workout symposium


Secrets to a Successful Distressed Commercial Loan Workout…Even if Your Property Is “Underwater”


***7 hours of CE credits for California CPAs***
***3 hours of MCLE credit for California lawyers
(application pending)***


FOR MORE INFORMATION or to register for The Ultimate Commercial Loan Workout Symposium CLICK HERE.

Special offer for friends of Hassle-free Cashflow Investing:
30% off registration!  Use discount code: Campbell





Owners and developers of financially troubled real estate projects must keep properties afloat despite waning cash flows and weakening property values. You have millions already invested in your project. If you have investors, the burden of your responsibility to protect their hard-earned savings weighs heavy on your shoulders. The decisions you make at this crucial time not only impact this investment but perhaps your entire financial future. Walk into this event with your problem loan–walk out with a stack of new ideas, strategies, contacts, and potential solutions that you can act on immediately in your commercial loan workout.

Who should attend:

Commercial real estate investors
Commercial real estate advisers, including:
Commercial real estate brokers
Commercial mortgage brokers
Commercial real estate asset managers
Commercial property managers
Real estate lawyers

Includes networking lunch at the fabulous Four Seasons Hotel.

Why you need The Ultimate Commercial Loan Workout Symposium and why you need it NOW:

At the risk of invoking the over-used “perfect storm” analogy, that is exactly what the already distressed commercial loan borrower is facing.

Consider this:

§ Effective June 15, 2011, new FASB accounting standards change the way lenders are required to report their troubled debt restructurings. This significant development introduces yet more uncertainty for the commercial borrower in distress.

§ The near-term outlook for commercial loans is dismal. A recent United States Congressional Oversight Panel report expressed “deep[] concern…that commercial loan losses could jeopardize the stability of many banks…and…contribute to prolonged weakness throughout the economy.

§ Between now and 2014, about $1.4 trillion in commercial real estate loans will reach the end of their terms. Nearly half are at present ”underwater”.

§ Commercial property values have fallen more than 40 percent since the beginning of 2007.

§ The largest commercial real estate loan losses are projected for 2011 and beyond; losses at banks alone could range as high as $200-$300 billion.

§ Difficulties in getting new loans creates uncertainty for commercial borrowers who need to refinance because their loans are now coming due.

§ Many commercial property owners are confronting severe financial challenges due to the lingering recession.

This convergence of risks and challenges makes it crucial that the commercial borrower approach the commercial loan workout negotiation more strategically and better equipped than ever before.

With the right commercial loan workout strategy, you could get your lender to agree to:

Lower your monthly payments

Reduce your interest rate

Stop receivership

Delay the foreclosure process

Stop the foreclosure process

Convert to interest only

Lengthen your amortization schedule

Reduce or eliminate late fees /penalties

Extend your loan maturity date

Even advance you more money to save your property

But you need to know how to play the game.

What you learn here could make the difference between success and failure in your commercial loan workout negotiation

Join our distinguished panel as they guide you through the landmines and give you an easy-to-understand step-by-step action plan to maximize your chances for success in your commercial loan workout.

Here’s just a partial list of what you will learn:

1. The 7-step process to virtually every successful commercial loan workout

2. Ten questions you must answer before beginning any loan workout negotiation…any one of the answers could radically impact your leverage in the negotiation

3. Special commercial loan workout issues presented by securitized loans

4. Special commercial loan workout issues presented by construction loans

5. What is a BOV, when and why you need one, and how to get it without charge

6. What works and what doesn’t: An “insiders” look at the lender’s playbook for distressed loan negotiations–this will help you almost read your lender’s mind and push the right buttons at the right time to improve your outcome

7. The impact of having multiple lenders in a commercial loan workout

8. The impact of having multiple borrowers in a commercial loan workout

9. Four proven strategies to stop a foreclosure sale dead in its tracks

10. The danger of waiting too long to attack a sale…why seeking to prevent a trustee sale is always better than trying to set one aside after the fact.

11. Four legal grounds to recover your money damages PLUS your attorney’s fees PLUS your lost profits PLUS punitive damages from the lender after a wrongful foreclosure and sale

12. Six ways you can turn the tables on the lender with legal claims of lender liability

13. The trap for the unwary borrower that could defeat any breach of contract action against the lender

14. Six different ways your lender might have breached your loan documents that could radically improve your bargaining position in your loan workout negotiation

15. How to hold the lender accountable for its broken ORAL promise to extend your trustee sale date

16. Five different varieties of fraud–any one of which could be enough to win your case.

17. The duress defense

18. The elder abuse remedy

19. The difference between a “restructure” and a “workout” and why you must know which term applies to your situation.

20. The critical first step that will stack the odds in your favor for a successful negotiation

21. What is a “loss share agreement” and why you must know if your lender has one

22. “Pre-workout Letters”: which term every investor should push back on

23. What is a “clawback” and why you need to know about it

24. What is “springing recourse” and “springing lockbox”

25. When a non-recourse loan isn’t–how investors could unexpectedly lose this crucial form of asset protection if they’re not careful

26. Alternatives to foreclosure

27. The right and wrong way to play “the bankruptcy card”

28. What is a “cram down” and how you can use it to turn the tables on the lender

29. Four questions that could determine whether a lender will work with you or dump you

30. Five powerful, proven arguments you can make to convince a lender to keep you in control of your project

31. Deed in lieu of foreclosure

32. Consensual foreclosure

33. How to still make $$ from your project even if you give it back to the lender

34. The commercial short sale process

35. Forbearance Agreements

36. Twelve powerful, proven bargaining chips to help convince a lender to work with you

37. The “Hail Mary” workout strategy that actually works

38. The tax and accounting issues you must understand before you commit to any workout

39. Asset protection strategies: what you can and can’t do when your loan is in distress.

40. What every investor must understand about fraudulent transfers to avoid criminal and civil penalties.

41. How can borrowers identify and minimize their legal risks when contemplating a real estate workout?

42. What are some best practices in negotiating a real estate workout agreement?

…and much, much more!


FOR MORE INFORMATION or to register for The Ultimate Commercial Loan Workout Symposium CLICK HERE.

Special offer for friends of Hassle-free Cashflow Investing:
30% off registration!  Use discount code: Campbell




1. The Rules Of The Game Have Changed

You are facing a perfect storm of challenges and the new FASB standards are just one reason why the rules of the game for commercial loan modifications are different. Attend this special event and you will learn how to use those rules to your maximum advantage instead of being blindsided by your ignorance of the new reality.

2. This Information Isn’t Available At Any Other Seminar

We are not aware of anywhere that you can get all this critical information from such reputable sources. If you’re looking for the fastest and least expensive way to access this information from these sources, this Symposium is it.

3. The Least Expensive Way To Get All This Expertise

If you were going to buy the time of each of these professionals, it would cost you thousands of dollars. Your nominal investment in this Symposium is a fraction of that cost.

4. Cutting-Edge, Creative Solutions To Your Problems

Attend this Symposium and learn the latest, cutting-edge strategies, one or more of which could be the one that saves your investment in your property and your financial future.

5. Incredible Networking Opportunity

At almost every live event, the best part is usually the connection you make with somebody who may be able to help you solve your problems and take your business to the next level.

6. You Have Zero Risk: Our 100% Satisfaction Guarantee

We are offering this program with our Zero-Risk 30-Day 100% Satisfaction Or Your Money Back Guarantee. Simply attend the event, then take a full 30 days to try out the strategies, techniques and distinctions you’ll learn. If you don’t agree this event was worth every penny, just contact us and we’ll refund 100% of your money, no questions asked. This does not constitute a guarantee, warranty, or prediction regarding your results but, rather, only that you will be satisfied with the educational content of this event.

Commercial Loan Workout Symposium SPECIAL BONUS #1:

Early-Registration Discount

If you purchase by June 27, 2011 you will receive $100 OFF the regular price!

Commercial Loan Workout Symposium SPECIAL BONUS #2:

30-Minute Legal Consultation

You’ll get 30 minutes with Jeff Lerman, “The Real Estate Investor’s Lawyer” to discuss your commercial loan workout and potential legal “ammunition” you may be able to use in your workout negotiation

Commercial Loan Workout Symposium SPECIAL BONUS #3:

30-Minute Bankruptcy Strategy Session

You’ll get 30 minutes with Lou Kempinsky to discuss your bankruptcy strategy and questions

Commercial Loan Workout Symposium SPECIAL BONUS #4:

Commercial Loan Workout Feasibility Analysis

You’ll get a preliminary loan workout feasibility analysis by Guardian Solutions.

Commercial Loan Workout Symposium SPECIAL BONUS #5:

Strategic Brainstorming Session For Your Loan

You’ll get a complimentary brainstorming session to discuss your problem loan and potential solutions with master real estate investment strategist David Campbell

Commercial Loan Workout Symposium SPECIAL BONUS #6:

Recording of Entire Event

Register for the live event and you’ll also get a recording of the entire event (after refund period expires).

Commercial Loan Workout Symposium SPECIAL BONUS #7:

10% Discount Off Legal Services

You’ll get a 10% discount of legal services at Lerman Law Partners, LLP, up to the cost of your registration.


FOR MORE INFORMATION or to register for The Ultimate Commercial Loan Workout Symposium CLICK HERE.

Special offer for friends of Hassle-free Cashflow Investing:
30% off registration!  Use discount code: Campbell



Meet the Faculty for The Ultimate Commercial Loan Workout Symposium


David Campbell,
Real Estate Investment Strategist

A real estate developer, investor, syndicator, and broker, Mr. Campbell has been a principal or key advisor in over $800 million of real estate transactions including apartments, office, retail, hospitality, winery, condo-conversion, and production home building. Believing that properties do not have problems, people do, David takes a people first approach towards finding creative solutions for difficult properties and the people who own them. Mr. Campbell’s ebooks, “Hassle-free Cashflow Investing” and “Hassle-free Cashflow Lending,” and his popular real estate investing blog can be found at


Jeffrey H. Lerman, Esq.,
Managing Partner, Lerman Law Partners, LLP

Mr. Lerman’s past positions include President of the County Bar Association, Co-Chair of the California State Bar Real Estate Litigation Section, and Co-Chair of the County Bar Real Property Section. He has developed a nationwide reputation as “The Real Estate Investor’s Lawyer”, having been featured as guest commentator on TV, radio and in newspapers. His practice focuses on helping commercial real estate investors, including loan workouts. He has been awarded the highest rating possible for professional excellence, legal ability and ethical standards by his peers (Rated “AV-Preeminent” by Martindale-Hubbell). His law firm website is


Michelle C. Lerman,
Partner, Lerman Law Partners, LLP

A Certified Specialist in Estate Planning, Trust & Probate Law by the California Board of Legal Specialization of the State Bar of California, Michelle has been in practice for more than 25 years, is the co-chair of the County Bar Association Mentor Group, member of the Estate Planning Council, JCEF Estate Planning Subcommittee and member of the Marin County Bar Association Board of Directors.



Louis E. Kempinsky, Esq.,
Peitzman, Weg & Kempinsky LLP

Mr. Kempinsky’s practice encompasses trial and appellate work in both State and Federal courts, involving a wide variety of issues, including bankruptcy, business torts, commercial, contract, corporate governance, environmental, franchise, real estate, trademark and other intellectual property. Mr. Kempinsky also represents creditors and debtors in bankruptcy cases and out of court workouts. He also sits as a judge pro tempore and lectures frequently. He has been honored by the American Bar Association and has been named a “Super Lawyer” by Law & Politics and Los Angeles Magazine.


Steven Fried,
Capital Finance

After 11 years with major banks, in 1979, Mr. Fried entered the field of Independent Banking, rehabilitating troubled banks. He has been the Chief Executive Officer of three different banks, testified before the Securities and Exchange Commission and as an expert witness on matters related to finance. In 1992 he was named President of the California Independent Bankers. Mr. Fried is the owner of Capital Finance, a finance and consulting concern, providing expert testimony, litigation support and consulting services to the legal community. Capital Finance is a licensed & bonded Commercial Finance Lender.


Brian Shniderson,
Managing Director,
B&A Capital Partners

Brian has been involved in real estate as an investor, developer, lender and workout consultant for the past 20 years. Brian is the Managing Director of B&A Capital Partners. B&A is a direct Lender on commercial real estate transactions ranging in size from $2MM – $30MM, nationwide and in Canada for short term, private money, bridge loans.


Steve Bram,
George Smith Partners

Mr. Bram is a co-Founder of George Smith Partners and served as the company President for over 5 years. He is widely recognized as one of the nation’s leading real estate investment banking professionals. During his more than two-decade tenure at the firm, he has arranged billions of dollars in financing. He is a specialist in the area of structured financing, and is recognized nationally for his expertise in the hotel and hospitality sector. Mr. Bram holds an MBA from The Wharton School of Finance. He earned his BS from the Cornell University School of Hotel Administration, graduating #1 in his class.


Kirk Malmrose,
Managing Director,
TriSail Capital Corporation

Kirk Malmrose is a Managing Director for TriSail Capital Corporation, a wholly-owned subsidiary of Bank of America Merrill Lynch. TriSail provides high-leverage finance for real estate investments. During his tenure at TriSail, Mr. Malmrose has been directly involved in the underwriting, asset management and origination of over $350 Million in equity and mezzanine investments representing over $1 Billion in aggregate value. Mr. Malmrose has over 20 years experience in loan originations, workout, OREO, and corporate real estate.


Steven J. Oshins,
Law Offices of Oshins & Associates, LLC

Based out of Las Vegas, Nevada, Steven is rated AV by the Martindale-Hubbell Law Directory and is listed in The Best Lawyers in America®. He was voted into the NAEPC Estate Planning Hall of Fame® and will be inducted in 2011. He has been named one of the Top 100 Attorneys in Worth, one of Southern Nevada’s Best Lawyers in In Business Las Vegas, one of the Best Lawyers in America in the Trusts & Estates category in The American Lawyer, one of the Best Lawyers in America in the Tax Law  category in Corporate Counsel, named Nevada Super Lawyer in the Wills, Trusts & Estate Planning category in Nevada Business Journal, named Nevada Super Lawyer in the Estate Planning & Probate category in Las Vegas Life and named Mountain States Super Lawyer in the Estate Planning & Probate category in Law & Politics.


Jeramie P. Concklin,
CEO, Guardian Solutions

Guardian Solutions is one of the nation’s leading commercial loan modification firms. Based on his extensive experience and success in restructuring commercial debt, Mr. Concklin speaks to commercial property owners, brokers and bankers at various industry events about effective restructuring of securitized commercial property debt.



Want To Attend For Free?

Here are two simple steps you can take to attend for free:

Step #1: Refer your friends. We’ll pay you a $100 referral fee for every person who registers. Just click the “Refer your friends” link in the previous sentence, sign up to get your affiliate link and follow the simple directions.

Step #2: After the event, send us your success story. Apply what you learn from this course, take action, and send us your success story (tell us how you accomplished your loan workout, as many specifics as you can about all your economic benefits, how great you felt about getting out from under this burden, etc.), give us permission to use your story and your first and last name and city in future marketing materials, and we’ll refund you $250 as our way of saying “Congratulations for taking action!”

Here are just some of the many testimonials from attendees of past Investor Education Institute Series Events:

“Information is clear, precise and organized.”
— Sky Kim, San Jose, CA

“Good value for the money …”
— Magor Sanders

“This may be the best event I ever attended!”
— David Kang

“Overall, really great value for your time and money.”
— Eric Rude

“Very hands-on, useful sessions on issues that really matter to the real estate investor.”
— Lynda Sands, San Diego, CA

FOR MORE INFORMATION or to register for The Ultimate Commercial Loan Workout Symposium CLICK HERE.

Special offer for friends of Hassle-free Cashflow Investing:
30% off registration!  Use discount code: Campbell

We hope to see you at the Commercial Loan Workout Symposium in Los Angeles on July 6, 2011.

How To Trade 18 Chicken Eggs For All of the Houses in Orlando, Florida

How To Trade 18 Chicken Eggs For All of the Houses in Orlando, Florida 


As I’ve discussed before in my free eBook Secrets of Hassle-Free Cashflow Investing, there are (at least) five ways to make money with investment real estate:

1) Cash throw off – the amount of rental income left over after you pay all of the expenses and the mortgage on the property

2) Income tax savings – the amount of money you would have paid in income taxes if you did not enjoy phantom losses from real estate deprecation

3) Amortization – the portion of your mortgage paid by your tenant that makes your loan balance smaller

4) Appreciation – the increase in the ratio between the intrinsic value of real estate and its value compared to other objects with intrinsic value (value increase)

5) Inflation – the increase in the ratio between the intrinsic value of real estate and its value as denominated in a currency (price increase)

Many people lump appreciation and inflation and into the same basket, but to an investor these phenomena are very different.

It is possible for an item to appreciate and go DOWN in price. For example, if you bought a house for five Toyota trucks and sold it for six Toyota trucks, you have experienced appreciation because your house was sold for more trucks than it was purchased for. However, if the price of Toyotas has gone down, you may have experienced a monetary loss. If you bought a house for five Toyota trucks and sold it for four Toyota trucks, your house declined in value. But, if the price of a Toyota truck went from $25,000 to $40,000, you would have purchased a house for $125,000 and sold it for $160,000. Home appreciation is nice but it doesn’t necessarily mean we will have made a profit. As an investor who borrows money to purchase houses, I need my assets to INFLATE in price regardless of whether they APPRECIATE.

inflation chart

I have been investing in real estate since 2000 and because of my hard work, tenacity, and skill I am now a multi-TRILLIONAIRE. As a reminder of this insane wealth, I carry a fifty-trillion dollar bill in my wallet. OK, so it’s really 50 trillion Zimbabwe dollars which is not enough to buy a can of Coke (Z$50,000,000,000,000 = $0.40 USD), but it is still fun to say “I am a trillionaire”.  Carrying this bill around in my wallet is a great reminder to me of how wealth is transferred through inflation.

Let me reiterate; inflation does not create wealth, it merely transfers wealth from lenders to borrowers.

Let’s examine Zimbabwe’s case of extreme inflationary wealth transfer in a whimsical real estate analogy. If you were smart enough and able to borrow Z$600 billion (Zimbabwe dollars) in 1980, the proceeds of the loan would have allowed you to purchase every single home in the city of Orlando, Florida (population 128,000). Twenty-eight years of inflation later, in 2008, you could have repaid the entire Z$600 billion debt with eighteen chicken eggs. Z$100 Billion for three eggs = inflationImagine how much real wealth was transferred through the inflationary actions of Zimbabwe’s central bank. While extreme, this is an example of how inflation transfers things with intrinsic value to people who purchase them with debt denominated by an inflating (fiat) currency. Every government in the history of the modern world has radically devalued (inflated) its currency over time; the US dollar is no exception.

If inflation makes borrowers winners and lenders losers, why would banks continue to lend money?

The answer is shockingly obvious. Banks don’t lend out their OWN money. Banks lend out YOUR money. Banks make a profit by lending money at a rate of interest higher than the miniscule amount of interest depositors like you have leant it to the bank for. Your savings account at a bank is an asset to you and a liability to the bank. The banks owes you your deposit back, right? That makes the bank a borrower. Banks are not adversely affected by inflation because they make the spread between the income and expense of your money. The risk of inflation is borne entirely by the depositor not the bank. In fact, banks prefer inflation because as inflation pushes up asset prices the percentage of loans that default is reduced and the size of their loans increases.

Who are the biggest borrowers in the world? Governments and banks! The rules of the currency (inflation) game are made by the same people who have the most to gain from inflation – governments and banks!  Expecting the inflation game to change is like expecting the fox in the hen house to stop eating chicken dinners.

Inflation is an ingeniously evil way for governments and banks to steal wealth from the financially illiterate.

Inflation allows governments and banks to reach into your pocket and take your money without your consent. The only way to protect your family from this virtual home invasion robbery of your currency is to be a co-conspirator in the inflation game.

Borrowing at a low rate and investing at a higher rate is called arbitrage. Arbitrage is the best wealth preservation and wealth creation tool there is. Investment real estate whose income is greater than the cost of funds borrowed to purchase the real estate is my favorite form of arbitrage (CAP Rate > Interest Rate). Leveraged real estate generates profits as the asset price (purchase price) increases with inflation and the effective cost of the debt decreases with inflation.

You cannot escape inflation unless you are investing with other people’s money the way that banks and governments do. To protect your family from inflation, you MUST be a borrower of good debt.

How can you make these concepts work for you? Ask us! Our integrated team approach to financial planning focuses on people and their unique resources.

In a sixty minute no-cost consultation, we will:

1) Help you explore your access to Cash, Cashflow, Credit, Equity, Time, Skills, Knowledge, Credibility, Strategic Relationships, and Access to Deal Flow as they relate to real estate investing and your primary job or business

2)Help you articulate your financial targets and personal investment philosophy

3) Help you determine whether you need to be in wealth accumulation mode or redeployment mode for sustainable financial independence

4) Help you customize an investment plan that is consistent with your financial objectives and personal investment philosophy

If you are struggling with an existing property, we can help as well. Our team believes that properties do not have problems, people do. We take a people-centered approach towards finding creative solutions for real estate investments and the people who own them.

If you are ready to supercharge your financial life and protect your family from the injustice of inflation, email me to schedule a no-cost, personalized investment strategy consultation.


Best Regards,

David Campbell
Real Estate Investor / Developer / Financial Mentor
Office: (866) 931-9149 Ext. 1

Twitter: InvestingMentor Facebook: CashflowInvesting




Understanding and Profiting From the Rising Price of Gas

By Financial Mentor David Campbell

The price of gas has gone up over 50% in the past twelve months.

While the mainstream media gives us conflicting opinions about whether we are experiencing inflation, common sense tells us our dollar is losing value at a rapid pace. Long time newsletter readers know I write about inflation a lot because it is the most important yet misunderstood economic concept in our society.
price of gas april 2010 to april 2011Since the dawn of government-issued currency, Federal governments have paid their bills by printing money rather than spending less than their revenues. Inflation is a popular form of taxation because most people are financially illiterate and don’t understand the shell game that is going on. Inflation gives the government virtually unlimited spending power. Virtually unlimited spending power gives the government virtually unlimited power. Once a government has virtually unlimited power, they are highly unlikely to reverse course.

The first people to receive new dollars printed by the US government are foreign governments who received dollars in exchange for service on the US debt and the US trade imbalance. The United States imports things with real intrinsic value, such as clothing and oil, and we export worthless paper backed by a good faith promise to pay from the American people. When foreign governments get a new shipment of US dollars, they have very few places to put them where they will retain value. Foreign governments know the US is sending them the ethical equivalent of counterfeit money and so foreign governments want to trade in their worthless scraps of US currency for something of intrinsic value as quickly as possible. Foreign governments cash in their fragile US Dollars primarily for two things – precious metals and oil. Precious metals have intrinsic value, but oil has much more utility. The world uses the US Dollar to denominate the price of oil. Because of the size of the oil market, its utility, and intrinsic value, oil is the natural commodity to soak up the surplus of bogus currency the US government is floating.

Technological breakthroughs such as hydraulic fracturing have increased the supply of extractable oil while the worldwide recession has reduced the demand for oil. Normally when you have reduced demand and increased supply, the price of something goes DOWN. What’s really going on is the price of gas is rising dramatically because of an excess of dollars, not an excess of demand. The rising price of gas should be a major leading indicator that the price of everything else (including wages and rents and real estate) will go up. Inflation does not affect the price of all things at the same time. Inflation has a trickle-down effect based on who gets the cash first, second, third, etc. The price of gas is leading the inflation charge because the US money supply has flooded foreign governments who get first choice of what resources they want to exchange their US dollars for and they’ve chosen oil.

What you pay for in a gallon of gasIronically, while the US government is printing money as a “hidden tax” to drive up the price of gas, the government is simultaneously lowering the tax rate on gasoline as a way of masking the impact of rising gas prices for consumers. Inflation is driving the price of international crude oil up while reduced gasoline taxes inside the US are influencing the price to go down. An important thing to remember is the reduction of gasoline taxes will have a limited impact on the price of gas while international market and inflationary forces will still be able to drive the price of gas to infinity and beyond (deference to Buzz Lightyear).

Don’t get depressed by this warning of inflation. If you are financially literate, you can use this information to take action and make a profit for your family. There is no way you could have prevented the terrible tsunami in Japan. However, if you had a year’s notice that the tsunami was coming, you would have done a great service to humanity by selling tsunami preparedness kits in the areas you knew would be affected. This is the same as inflation. Inflation is a powerfully devastating force that will wipe out tens of millions of families. Unfortunately we can’t stop it. If you know inflation is coming, you will do humanity a great service by preparing yourself and your family for it.


Here are a few ways to use the phenomenon of rising price of gas to safeguard your family from the coming inflation:

ACTION ITEM #1: Acquire rental property as close as possible to major job centers.

As the price of gas rises, people will pay a higher premium to live closer to their jobs. As the price of gas rises, your rents should follow suit.

ACTION ITEM #2: Own rental property in communities near centers of oil extraction.

The rising price of gas will stimulate economic growth in oil rich areas such as Dallas, Texas while depressing economic growth in other areas which must pay a higher cost to import their oil. As the price of gasoline rises, job creation and economic prosperity will contribute to rising rents and housing prices in oil rich areas.

ACTION ITEM #3: Own rental property in areas where job growth is fueling a massive demand of housing while increased construction costs are constraining the supply of new housing. Gasoline / oil is a major component of construction costs.

As the price of gas rises, the cost of construction will increase dramatically thus limiting the ability to add new supplies of affordable housing. Reduced supply combined with increased demand will drive up prices and rental rates of existing housing inventory. Again, Dallas, Texas is a great example.

ACTION ITEM #4: You could invest in oil related stocks or into the extraction of oil.

I am generally against owning publicly traded stocks because of the lack of control over your investment, the lack of intrinsic value associated with owning a minuscule share of a publicly traded company, and the lack of cash flow from non-dividend paying stocks. However, if you’ve already decided to have stocks in your portfolio, talk with a qualified stock investment adviser (not me) on the potential for including oil / energy stocks into your portfolio.

Best Regards,

David Campbell
Financial Mentor
Office: (866) 931-9149 Ext. 1

Skype: HassleFreeInvesting
Twitter: InvestingMentor
Facebook: CashflowInvesting

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What Will Happen To You When America No Longer Prints the World’s Reserve Currency?

What Will Happen To You When America No Longer Prints the World’s Reserve Currency?

By Financial Mentor David Campbell

In the spirit of no investor left behind, let’s establish what a world reserve currency is:

A world reserve currency allows international bankers and governments to invoice trade and denominate foreign debt securities in a common currency.

The reason most business people in the world speak at least some English is because English and American dollars are the common language of world commerce.  In simple terms, when Iran sells oil to Egypt, Egypt buys its oil using US Dollars.  Even though the official currency of Egypt is the Egyptian pound and the official currency of Iran is the rial, the two countries conduct business in US dollars because they trust the value of the US dollar more than they trust the value of the other’s native currency.  Both countries must have a stockpile of US dollars sitting around so they can send them back and forth to conduct trade with each other.

A world reserve currency is selected by the banking community for the strength and stability of the economy in which the currency is used.

Prior to WWI, the British pound sterling, the French franc and the German mark were used interchangeably in the world’s reserve currency market.   A currency becomes less stable when the economy of the country issuing the currency becomes less dominant and bankers begin to abandon it for a currency issued by a more stable economy.  After WWI, the German economy was weak and the American economy was strong so the German mark was replaced by the US dollar.  After WWII, the British and French economies were weak and therefore the pound and franc were abandoned in favor of the US dollar.  The victors of WWII formally discouraged the world from using the currency of Germany and Japan in international trade as an additional means of suppressing their formal rivals.   After two consecutive world wars had ravaged the economies of Europe and Asia the United States dollar was in the right place at the right time to be adopted as the world’s reserve currency. Fortunately for America, it has been used as the primary unit of currency in international trade ever since.  Having the ability to print the world’s currency is one of the major reasons why the United States enjoyed such unbridled prosperity since WWII.

On August 15, 1971, the United States unilaterally terminated the convertibility of the US dollar to gold when its president, Richard Nixon, gave an executive order without the approval of Congress or the American people.

August 2011 celebrated the fortieth anniversary of the most elaborate Ponzi scheme ever perpetuated.  This means for over forty years, America has been printing “counterfeit money” because our money is not backed by anything.  Foreign countries have been sending things of tangible value such as food, energy, and labor to America where they receive a limitless supply of a counterfeit currency that is manufactured with the click of a mouse.  America imports consumer goods and exports dollars and the world is tired of this unfair imbalance.

If the world stopped accepting the US dollar as the world reserve currency, the Ponzi scheme would come to screeching halt and the last forty years of American prosperity would be exposed for what it is: worldwide theft.

The Ponzi scheme has lasted this long because the whole world is in on the game.   If you are a very large, old world nation, you are encouraged to print your own worthless currency and trade it for our worthless currency.  If you are a small nation, America will send you a river of American dollars to buy your loyalty.   If your country is neither big nor small and you are an emerging market with natural resources America wants, America will flex the muscle of its military to convince you to keep your mouth shut.

Brazil, Russia, India, and China (called BRIC) is the largest entity on the global stage. They are tired of the United States stealing from them by trading with a counterfeit currency and they have formed an economic coalition to find a solution.  China is America’s largest lender and trading partner and they are worried America is about to default on its bar tab.  China manufactures all of the iPads in the world and then trades them for counterfeit American dollars.  If you were China, wouldn’t you be worried?

reserve currency BRIC versus USD
Comparing the relative size, population, and economic strength of BRIC to the USA

BRIC is leading a charge to abandon the US dollar as the world’s reserve currency.  What does that mean for you?  If BRIC chooses a reserve currency other than the US dollar, the rest of the world will probably follow.  If the US dollar is not used as a medium of trade between other countries, those dollars will have no value to those countries and the dollars will be sent back to the US economy to buy anything they can.   Imagine if the whole world suddenly decides to exchange their dollars for food, energy, labor, and real estate.   When the whole world clamors to turn in their US dollars for something of tangible value, a massive influx of worthless dollars will flood the US economy causing  tsunami like inflation.  America is too deeply in debt to return to a sound money policy where dollars are backed by gold or anything else of intrinsic value.  It is only a matter of time before the world abandons the US dollar as a reserve currency (probably replacing the US dollar with a new currency backed by BRIC).   In the big scheme of world history, the US dollar has been the world’s dominant reserve currency for a very short time.  It would be foolish and arrogant to think the US dollar would have world dominance forever.

I’ve been preaching about the inflation tsunami for the past two years and it is now upon us.   The window of opportunity to prepare is about to run out.

If you are looking to protect and enhance your quality of life, you need to understand and accept inflation as a fact of life and make financial decisions accordingly.   I have lots of concrete action steps on how to prepare for and prosper from the coming inflation and I would be happy to schedule a phone consultation to share them with you.  If you would like to schedule a no cost investment strategy consultation with David Campbell and his team of financial and legal advisors, please click here or call our office at (866) 931-9149 Ext. 1.
To your success,

David Campbell
Financial Mentor
Office: (866) 931-9149 Ext. 1


PS. You’ve got to watch this four minute video of Richard Nixon describing his executive order to pull the US dollar from the gold standard and how it will impact the American people and the US dollar as the world’s reserve currency.


California Dreamin’—of Jobs in Texas

Hounded by taxes and regulations, employers in the once-Golden State are moving east

APRIL 22, 2011

Wall Street Journal
By John Fund

Austin, Texas

It wasn’t your usual legislative hearing. A group of largely Republican California lawmakers and Democratic Lt. Gov. Gavin Newsom traveled here last week to hear from businesses that have left their state to set up shop in Texas.

“We came to learn why they would pick up their roots and move in order to grow their businesses,” says GOP Assemblyman Dan Logue, who organized the trip. “Why does Chief Executive magazine rate California the worst state for job and business growth and Texas the best state?”

The contrast is undeniable. Texas has added 165,000 jobs during the last three years while California has lost 1.2 million. California’s jobless rate is 12% compared to 8% in Texas.
“I don’t see this as a partisan issue,” Mr. Newsom told reporters before the group met with Texas Republican Gov. Rick Perry. The former San Francisco mayor has many philosophical disagreements with Mr. Perry, but he admitted he was “sick and tired” of hearing about the governor’s success luring businesses to Texas.

Hours after the legislators met with Mr. Perry, another business, Fujitsu Frontech, announced that it is abandoning California. “It’s the 70th business to leave this year,” says California business relocation expert Joe Vranich. “That’s an average of 4.7 per week, up from 3.9 a week last year.” The Lone Star State was the top destination, with 14 of the 70 moving there.

Andy Puzder, the CEO of Hardee’s Restaurants, was one of many witnesses to bemoan California’s hostile regulatory climate. He said it takes six months to two years to secure permits to build a new Carl’s Jr. restaurant in the Golden State, versus the six weeks it takes in Texas. California is also one of only three states that demands overtime pay after an eight-hour day, rather than after a 40-hour week. Such rules wreak havoc on flexible work schedules based on actual need. If there’s a line out the door at a Carl’s Jr. while employees are seen resting, it’s because they aren’t allowed to help: Break time is mandatory.

“You can’t build in California, you can’t manage in California and you have to pay a big tax,” Mr. Puzder told the legislators. “In Texas, it’s the opposite—which is why we’re building 300 new stores there this year.”

Other states are even snatching away parts of California’s entertainment industry. The Milken Institute, based in Santa Monica, Calif., reports that 36,000 entertainment jobs have left the state since 1997. The new film “Battle: Los Angeles,” which is set in California, was filmed in Louisiana.

“The red tape is ridiculous,” says Mark Tolley, the managing partner of B. Knightly Homes, which relocated to Austin from Long Beach in 2005. “Regulators see developers as wearing a black hat and the environmental laws have run amok.”

“I’m a pro-jobs Democrat,” Mr. Newsom told me. “My party needs to get back into the business of jobs.” Mr. Newsom says he’s developing an economic development plan to present to Gov. Jerry Brown, who he says “gets it” on the need for business-friendly policies. Mr. Newsom told me that what impressed him most about Mr. Perry and the Texas legislators was their singular focus on job creation.

California, by contrast, seems to constantly lose focus. Several Democrats who agreed to go on the Texas trip were pressured by public-employee unions to drop out—and many did. And just as Texas business leaders were testifying about how the state’s tort reforms had improved job creation, word came of California’s latest priority: On April 14, the state senate passed a bill mandating that all public school children learn the history of disabled and gay Americans.

One speaker from California shook his head in wonder: “You can have the most liberated lifestyle on the planet, but if you can’t afford to put gas in your car or a roof over your head it’s somewhat limited.”

The most dramatic reform California could make would be to change its boom-and-bust tax system so it doesn’t depend on a small number of wealthy residents who can flee the state. The idea would be to broaden the income tax base and lower the state’s high rates. It works today in seven states ranging from Colorado to Massachusetts. Of course, the Lone Star State has no state income or capital gains tax at all.

“Texas’ economy is far less volatile due to its having neither a progressive income tax system nor a large tax burden,” concludes “Rich States, Poor States,” a study by the American Legislative Exchange Council. Less volatility also allows Texas to keep expenditures in check. While it shares with California the challenge of a huge budget deficit this year, it’s expected to close it without raising taxes. Texas’s overall spending burden remains below what it was in 1987—a remarkable feat.

When Jerry Brown ran for president in 1992, he understood the distorting nature of the tax code and proposed a flat tax with deductions only for rent, mortgage interest and charitable contributions. He called it “a silver bullet” for the economy. Mr. Brown has since abandoned that idea, grousing recently to a state legislator that “the flat tax cost me the New York Democratic primary.”

But if California continues its economic decline, something Texas-sized in its ambitions may be called for— whether it’s a moratorium on new business regulations or a restructuring of the state’s dysfunctional unemployment compensation or litigation. Nothing less is likely to stem the outflow of businesses and jobs from the Golden State.

Mr. Fund is a columnist for

Successful Real Estate Investors Are Geographically Agnostic

If you have limited your investment real estate search to the properties you can drive to within a few hours of your mid-sized American city, you have limited your search to just 0.0005% of all of the potential real estate investments in the world. (0.0005% is about one drip in a hot tub).  Sadly, many people radically and artificially restrict their real estate investment search because of old fashioned thinking. People telecommute to their jobs through cell phones and the internet, and they telecommute to their social engagements through Facebook and Skype, but they are unwilling to telecommute with their investments.

As one of my mentors frequently says, “Live where you want to live and invest where the numbers make sense.”   Many of my clients have adopted this investment philosophy and they are doing well because they can get in and out of markets and properties as the numbers and local economies change.

Your investments must be Geographically Agnostic (meaning a willingness to invest in any location where the numbers make sense).

Many of you know, I live in Northern California, but I run a development company in Dallas, Texas.  I’m willing to get on a plane to go to work because my family likes living in California, but the deals and the profits live in Texas.  I have owned property in four countries and four states because I live where I want to live, but I continually invest where the numbers make sense.  If you aren’t willing to let your dollars get on a plane to chase profits, you will not be a profitable investor for very long.  Markets will continue to change, economies will change, investment strategies will change, laws will change, and your life will continue to change.

What if you select an investment market because it is near your home and then you have to move? I showed one of my clients some amazing investment opportunities in Dallas but he was unwilling to consider them because they were more than 20 minutes from his home.  The investor bought investment properties near his home even though the numbers were not very strong.  Ironically, this investor works for a company that recently closed its doors in his home town and is moving his job to Texas.  The investor gets to make the choice of moving his family to Texas or remaining unemployed near his rental property.  Willingness and ability to move for work is a huge asset in this new economy.  Willingness and ability to move your capital to pockets of opportunity, regardless of the opportunities’ geographic proximity to your home, is also a huge asset.

If you spend a lifetime investing in one market with the same strategy, you will eventually get burned.  Real estate is not a one size fits all strategy.  While real estate is generally illiquid, the owner of the property must be fluid.  You must be willing to get into and out of properties and markets as conditions evolve.  You must continually adapt your investment strategy to market conditions and your need for personal gain.  If you are limiting your potential real estate investments to where you live, your investment strategy may or may not work in your local market, or the timing might not be ideal to enter or exit, or your strategy worked in your local market five years ago but doesn’t work today.   If you are willing to expand your search criteria from just your local market (0.0005% of all real estate in the world) to include all of the United States (4% of all properties in the world), you have increased your options and probability of success by over 8,000%.  Who doesn’t want their investments to have an 8,000% increased probability of success?

I have been focused on the Dallas market for the past three years because Dallas is rapidly preparing for a housing shortage.  The Dallas-Fort Worth ( DFW) area grows by one person every 62 seconds.   Is DFW is adding a new home every 3 minutes?   The answer is NO.  Developers cannot get the financing to build houses fast enough to keep up with demand.   There is no more available land within close proximity to job centers.  The land in Texas that is available to developers is at least thirty minute from where the jobs are and the land requires massive injections of capital to develop infrastructure.  The capital for this infrastructure isn’t available.  The result is a looming housing shortage.  If you get into the Dallas market before the housing shortage is reflected in home prices, you will be a winner.  Once the housing prices rise faster than rents, I will move my focus to the next market where the rent to purchase ratios make sense.  Once home prices in Dallas increase and interest rates rise, Dallas will be in a holding pattern for investors and we will need to focus on another market for our new acquisitions.

Want to know how to take advantage of real estate opportunities in Dallas?  I promise you won’t find investment opportunities like this anywhere else.  We are real estate developers who think like investors.  We are creating new inventory specifically designed to make you money.

Send an email to to set up a free investment strategy consultation, and we will let you in on the biggest real estate investing secrets of the decade.

Best regards,

David Campbell

Real Estate Investor / Developer / Author / Founder of Hassle-free Cashflow Investing

(866) 931-9149

Find me on Skype: HassleFreeInvesting

Part of our series of articles on investing in Dallas

Invest Where The Economy Is Going – Economic Prediction and Action Steps

Successful investors need to be able to make an educated prediction about which way markets and economies are moving.

Champion hockey player Wayne Gretzky explained the secret to his success like this:  “I skate to where the puck is going, not where it is.”  The same advice applies well to real estate investing.  If you are willing to make a prediction where the economy is going and you are willing to take action on what you know, you can make a lot of money.

The economy and the real estate market have trends.   There are times to buy real estate,  times to sell, and times to just hold on.  Real estate prices move up slowly and come down quickly.   Fortunately, real estate trends are easy to spot and make a prediction on if you know what to look for.  Unfortunately, by the time most people recognize the trend, it is too late for them to get into the game.

The real estate market is trending and I am going to spell things out for you in the simplest terms I can.   Each prediction and action step could fill a ream of paper in supporting arguments, so for the sake of brevity take things at face value for the moment and in my blog we can dig into each prediction separately as time and interest permits.

Here is my best prediction and action steps to making money in real estate over the next ten years:

PREDICTION 1: Inflation will cause prices to rise substantially as the dollar devalues.  I’ve been talking about this phenomenon for the past two years, and it has finally made its way into the mainstream media as retailers are raising the cost of food, fuel, and finished goods. You can visit my blog to read my extensive writing on this subject.  I particularly recommend this series of articles on how to profit from inflation.

ACTION STEP 1: Acquire income producing real estate with as much fixed interest rate debt as possible.  Do not skim over this statement too quickly.  Having both debt AND income to service the debt are vitally important.  The income will inflate with the currency and the debt will devalue with the currency.   As an investor, you need to prepare to win from inflation by having both of these financial tools in your arsenal (fixed rate debt and rental income).

PREDICTION 2: Texas will dominate job growth and population growth in the United States.  Again, I’ve written extensively about this in my blog: Texas Dominates Market Share.  If you are acquiring income real estate as a long term investment, you simply cannot ignore Texas.  If Texas were it’s own country, it would be one of the largest in the world from the standpoint of population size, geographic size, economic power, and political clout. It would also be one of the fastest growing countries (states) in the world.

ACTION STEP 2: Acquire income producing Texas real estate near major metros within a short drive of major job centers.  There is a lot of open space in Texas however, land is just now becoming scarce in the urban centers.  The scarcity of land in the major metros is an emerging trend for you to capitalize on.  People need jobs and houses.   You should own houses near major job centers so there is a constant demand for your housing.  A major job center will have at least 1,000 employees and will create a good or service that imports revenue from as far away as possible (e.g. a business with a local and world wide customer is more economically stable than a business who only has a local customer).    To learn where the revenue importing job centers are, here is an interactive map for you to use. (Special thanks to Hassle-free Cashflow Interns Rob Kippel, Brandon Krasner, and Heather Weldon for their assistance in creating powerful tools for you to use.  If you are interested in becoming a Hassle-free Cashflow Investing intern, please send us an email.)

PREDICTION 3:  Hispanics will dominate population growth throughout the US and especially in Texas.  The Hispanic population of Texas grew by 2.8 million people over the last decade.  This accounted for 65 percent of the state’s growth over the last 10 years.  In 17 Texas counties, the Hispanic population grew by more than 100 percent. The Hispanic market is the fastest growing segment of the middle class.  Here is a great newspaper article on the subject. I predict this trend will pick up speed partly because of immigration and partly because the Hispanic birthrate is double what it is in other ethnicities.

ACTION STEP 3: Invest in real estate and businesses that would appeal to a middle class Hispanic market.  Make sure your property managers speak Spanish and advertise in Hispanic media.  Hispanic families often have more children, have multiple generations and families that occupy a single home.  Buy properties with several bedrooms, but modest square footage to be price competitive. Real estate prices go up when more people compete for a limited supply of inventory.  Own the types of property that the maximum number of people would like to live in – single family houses with 3 or 4 bedrooms and 2 bathrooms.   A master bedroom is essential.  Game rooms, lofts, and media rooms are a non-recoupable expenditure to a cashflow investor.

PREDICTION 4: Domestic military spending will contract.  As the US becomes further entrenched in foreign wars, the US will spend less money keeping troops inside its borders.

ACTION STEP 4: Do not invest in military towns.   If a military base represents more than 10% of a local economy, put your dollars somewhere else.  It isn’t worth the economic risk if the military downsizes or eliminates the military base that is the lifeblood of your town.

PREDICTION 5: Fewer people will be attending college and more people will return to manufacturing.  The US economy is globalizing and many white collar jobs are headed overseas.  As the dollar devalues, it will be more competitive for the United States to manufacture things and export them to emerging markets in Asia and South America.

ACTION STEP 5: Invest in areas of the country such as Dallas where there is a tremendous amount of manufacturing infrastructure already in place. Large manufacturing centers need transportation logistics such as heavy rail, trucking centers, highways, and cargo airports. Manufacturing centers also need a very cost effective workforce and real estate prices.  Dallas-Fort Worth is a prime market for this.


PREDICTION 6: States with a favorable business climate and a low income tax burden will enjoy the most prosperous economies.  Formerly prosperous and business unfriendly states such as California will raise taxes, lower wages, and default on government pensions to cover their economic shortfall.  In areas where big business feels constrained by taxation, labor relations, and environmental regulations, expect declines in government services, poor quality public education, and weak transportation services as a result of unparalleled shortfalls in revenue and a declining business environment.

ACTION STEP 6: Examine the financial well being of any state, county, and city in which you decide to invest.   Live where you want to live, but invest in areas where local and state governments embrace responsible business growth.

PREDICTION 7: Interest rates will rise as the US government receives foreign political pressure to stop buying its own bonds and mortgage backed securities.  The stock market will see unexplained and radical fluctuations in value as the government manipulates stock prices through covert buying and selling of public traded stocks.

ACTION STEP 7: Do not invest your IRA in the publicly traded stock market.  Cash investors can get in and out of the stock market when times are turbulent while IRA funds are often “stuck” in the market with no place to go.  Evaluate options for investing your IRA in private placement investments, businesses, notes, or the indirect ownership of real estate.  I do not recommend buying real estate directly inside your IRA, but there are great strategies for getting your IRA funds into the indirect ownership of real estate.  If you’re interested in this, send me an email and I’ll send you some great information on creative ways to invest your IRA in non-volatile IRA friendly assets. There is no one size fits all investment / financial strategy.  That’s why we want to hear from you so we can help you develop a personal investment philosophy and then take action on it.  If you’ve read this far, pick up the phone  866-931-9149 ext 1 or send me an email so you can take action on these ideas.  CLICK HERE to schedule a no cost investor strategy consultation with David Campbell or one of his team members.  We are here to help you come up with creative investing ideas and solutions to your financial goals.

While I hope everyone reading this will do business with my real estate development and investment companies, I appreciate that there is no one size fits all solution to your financial goals. The purpose of an investor strategy consultation is to help you understand what your financial goals are and find a customized solution to solving them.  I look forward to hearing from you and hopefully I will be able to introduce you to an idea, person, or opportunity that will revolutionize your financial life.

To your success!

David Campbell
Professional Investor, Developer, and Financial Mentor


Please take a moment to comment on this blog post below:  Invest Where The Economy is Going – Economic Prediction and Action Steps

Why 2011 may be the end of the housing crash

Why 2011 may be the end of the housing crash – excerpt from the Wall Street JournalStandard poors housing chart

There might finally be some good news this year about the nation’s dismal housing market. Or, at least, the bad news could stop.

Either way, it will be welcome relief for current homeowners as well as for potential real-estate investors. Reasons to be optimistic have been sadly lacking since the housing bubble burst in 2006.

Housing Is A Good Deal

Housing is the most affordable it has been in decades, according to analysts at Moody’s Analytics. They don’t just look at house prices. They also look at incomes.

Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years. Prices usually average close to two years’ pay, although that varies nationally.

Investors Stepping Up

Here’s another sign the market is nearing a bottom: Investors have started to buy up houses and condos, in some instances paying entirely in cash. That’s a far cry from the heady bubble days when borrowed money seemed the key to riches. The bubble-era speculators who got burned tended to buy at the peak and borrowed heavily to do so. When the crash came, they quickly saw their wealth erased.

Click here to read the complete article about the end of the housing crash in the Wall Street Journal.

Return On Investment (ROI): A Different Perspective

By Rob Kippel – Hassle-free Cashflow Investing Strategist

Most people, when asked why they want to invest in real estate, fall into two camps. There are those who use real estate as a vehicle to make more money and those who use it as a vehicle to have more free time to live the lifestyle they want. Of those who are convinced they are just using real estate to make more money, many of them don’t realize they are using the increased wealth to substitute hours of work with hours of quality living. For those who only want to make as much money as possible to buy material things without regard for time, you may not gain much insight from this article. However, for those looking for more time to do the things they love, I must ask “If we are investing to ultimately have more time and our investments produce positive returns on money invested but also create more work that requires even more time, is our return on investment still positive?” To answer this question we need to quantify our return on investment in terms of time.

Time is the great equalizer (pardon the pun) of all time. While individuals may have limited control over the amount of time they spend on this earth, their time, unlike their money, will be the same as anybody else’s. Whether you are born into rags or riches, you still have sixty minutes in an hour, twenty-four hours in a day, and seven days in a week. Each individual has full discretion over how they utilize their time just as they do their money but their time, unlike their money, cannot be devalued. A minute today is worth sixty seconds just like it was back in 1913 when the Federal Reserve was created, unlike the Dollar which has been devalued by ninety-five percent since then. To put this into perspective, if a minute were devalued by ninety-five percent, it would be worth three seconds today. At this rate, the average expected lifetime in the U.S. of 78.3 years would be over in just under 4 years. Imagine having a mid-life crisis at the tender age of two! But I digress.

To calculate return on investment (ROI) in terms of time we must recognize and quantify the opportunity cost of time. Opportunity cost in terms of time means that for every hour you spend doing one thing you lose the opportunity to spend that hour for a higher and better use, whatever that may be. For example, if you spend eight hours a day at work, that’s eight hours a day you could have spent with family, pursuing a hobby, working for a higher rate, investing, etc. Going forward we will operate under the assumption that every dollar that you earn from your investment is a dollar that you don’t have to earn by spending time at work and therefore, have that time available to you for whatever you choose. This basically means that as your income from investment increases, your time at work decreases until the point where investment income equals your current income at which point you no longer have to work to maintain the lifestyle you currently have. We will further assume that your current lifestyle, in the material sense, will remain static so that there are no changes in expenses. Therefore if your investments can produce the income you currently earn, you will no longer have to spend the time you currently spend earning what you currently earn to achieve the means you currently have.

Before calculating ROI in terms of time let’s first calculate return on capital invested. ROI is calculated by dividing the amount of your profit by the amount of your investment and multiplying the result by 100 to get a percent. Say we use $50,000 to make a profit of $5,000 we would have a return on investment of 10% ($5,000 ÷ $50,000 X 100 = 10%). Let us now convert our profit in Dollars into profit in time. It may be helpful to think of hours as a currency just like Dollars and as such we are just converting our Dollars into hours like you would when you go to a foreign country. We will make this conversion when we go from the “country” where they invest for money to the “country” where they invest for time. When you are in the “money country” it is the dollars that matter to you but when you live in the “time country” it is the hour currency that you use to judge if you made a profit. We convert Dollars to hours by taking the amount of Dollars and dividing it by the rate (Dollars per hour) we would normally earn otherwise working at our job. Let’s say Joe earns a net $20.00 per hour at his job, his 5,000 Dollar profit from earlier is equivalent to a 250 hour profit ($5,000 ÷ $20 per hour= 250 hours) in terms of time because using our earlier assumptions, Joe now doesn’t have to work 250 hours to make that $5,000 since his investment did it for him. It is interesting to note that if Joe were paid twice as much hourly at his job, his profit of $5,000 would actually be worth half as much to him in terms of time ($5,000 ÷ $40 per hour= 125 hours). This occurs because the higher rate allows Joe to earn that same $5,000 in half the amount of time. Therefore, Joe only frees up an extra 125, as opposed to 250 hours, with his $5,000 profit he made from investing his $50,000. But Joe didn’t just invest his $50,000 to get that profit of 250 hours, he also invested his time. We must recognize that Joe has already spent 2500 hours to earn his initial capital to invest ($50,000 ÷ $20 per hour = 2500 hours) but we will not introduce this into our calculation for reasons I will elaborate on in a moment. Let us assume that between all the time spent on activities related to the investment, Joe has spent 250 hours to make his profit. At first glance it would seem that this would be a 100% ROI in terms of time (250 hour profit ÷ 250 hours invested X 100 = 100%) but this is not the case. Let me explain.
When we invest capital it is acceptable to receive a profit of less than 100% of the capital we invested because after we receive our profit we get our initial capital back. From our example, when Joe invests his $50,000 he is more than happy to receive a 10% ROI of $5,000 because he now has $55,000 (initial investment of $50,000 + profit of $5,000 = $55,000) which is more than the $50,000 he started with. This is not the case with time. When you invest an hour to get an hour you are no better off than when you started because you do not recapture the initial hour invested like you do when investing capital and are therefore net zero. To come out ahead, accounting for the lost hour invested, we need to have a return on investment in terms of time greater than 100%. Accordingly, we can modify our ROI formula to account for this fact. The resulting formula would look like this:
ROI expressed in terms of time = (profit expressed in time ÷ time invested) -1 X 100

Let’s apply this new formula to Joe’s situation. Joe made a $5,000 profit which expressed in time for him is 250 hours (remember we divided the Dollar amount by his wage rate which was $20 per hour). He did this by investing $50,000 and spent another 250 hours on the investment to make his 250 hours profit. Using our formula, Joe’s ROI in terms of time = (250 hours ÷ 250 hours) -1 X 100 = 0%. How can this be?! In terms of Dollars Joe had a 10% ROI. But remember Joe lives in the “time country” where they use hours and not the “money country” where they use Dollars. When converting his profit in the Dollar currency to the hour currency, Joe actually had a 0% ROI when measured in the hour currency. Joe is therefore no better off in terms of time than when he started even though he made a 5,000 Dollar profit!

So the question then becomes, “if I am investing for hours and not dollars, what can I do to increase my ROI expressed in terms of time?” Looking at our formula we have two options. We can either increase our profit expressed in time or decrease our time invested. Sure we could simply neglect our investments and just spend less time on them but this would most certainly have the effect of reducing our profit in both Dollars and hours. Just imagine what would happen to your return on capital if you were to not spend time finding a good investment, not spend time on due diligence, not spend time maintaining your investment, not spend time accounting and record keeping, not spend time reviewing your financial statements, not spend time strategizing with your attorney and CPA……… I think you get my point. This type of behavior would most likely have the effect of you actually losing money which makes your profit expressed in time negative even if you spent no time! This is an important point. Making a profit in Dollars is prerequisite to making a profit in time because you cannot offset a negative profit in dollars by spending a negative amount of time. Hypothetically, the least amount of time you can spend on an investment is zero in which case a negative profit in Dollars will always produce a negative profit in time when converted (which means you have actually lost time because now you have to work at your job to make up for the loss in Dollars if you wish to maintain your current means).

So if we cannot reduce time spent investing by simply not spending it, can we effectively reduce time to increase our profit expressed in hours? We can! Increasing our efficiency can effectively reduce time, without compromising results, through the use of technology, knowledge, skill, and experience which all take time to develop. Although it is advisable to continually strive to become more efficient and develop your knowledge and skill, you can short cut this process by introducing leverage. Just as in financial leverage where you can invest more money than you have, it is possible to use personal leverage to invest more time than you have! Personal leverage is the use of another person to accomplish your objective. This is usually done by paying, or otherwise compensating, someone else to do what you cannot do at all or cannot do as well or as efficiently. Although this will eat into your profit in the amount of the compensation to that person, when the right person is chosen the profit you ultimately reap will be much higher than what you could have gotten yourself and in addition you have reduced the amount of time you had to spend. When we look at the effect this has on our ROI expressed in time equation, the results are profound.

When you leverage the time, skill, expertise, knowledge, and relationships of others you dramatically reduce your time spent while simultaneously increasing Dollar profit which profoundly increases your ROI expressed in terms of time. In searching for ways to increase our ROI expressed in terms of time, we have just successfully explored the bottom of the equation which is the amount of time invested. Let us now explore the top of the equation which is profit in terms of time. Being that the conversion from profit in Dollars to profit in hours is fixed for a given individual, we shall simply look for ways to maximize our Dollar profit which will concurrently maximize our time profit. When seeking maximum profit in absolute terms (not in percentage terms) there are few options. Simply stated, they are increase the principal invested, the rate of return, the leverage on principal, or any combination thereof. Hypothetically the maximum possible return is achieved by investing the maximum possible principal at the maximum possible rate of return using the maximum possible leverage. If you have a propensity towards gambling and are a little sick in the head, this strategy may be a good one for you, but you should be aware of the dangers. To start with, investing all of your capital into one investment vehicle, while leaving you highly exposed to success should the investment be profitable, also leaves you completely exposed should it go bust. The lack of diversification is generally undesirable and the complete investment of your entire capital leaves no reserves should things go awry. The next problem is that when endeavoring to maximize rate of return it gets increasingly harder to find higher and higher rates and, while not a direct correlation, higher yielding investments do often come with higher levels of risk. On a side note, do not draw the conclusion that lower returns equal lower risk. A perfect example today is US T-bills, T-notes, and T-bonds. While yielding next to nothing they are extremely overvalued and very likely over the coming years to deliver to their investors massive capital losses if sold prior to maturity and insidious erosion of principal by inflation if held until then. All from “the world’s safest investment,” but again, I digress. Back to leverage. Just as with the leverage of time, leveraging capital can be an outstanding way to increase your ROI but leverage on capital, unlike time, comes with added risk. Leverage on capital will magnify both profits and losses, so it is extremely important to control for risk and have adequate reserves. On our quest to safely maximize profit in absolute terms, it therefore seems a prudent course to invest low to moderate amounts of our available capital at moderate returns, given the risk of loss is low, and then using maximum leverage to increase our return.

Here at Hassle Free Cash Flow Investing we combine very high leverage on money invested with extremely high leverage on time invested to deliver a truly superior ROI. Thanks to our creative financing and investment techniques we provide leverage that is nearly unmatched in today’s lending environment. We also have an experienced and knowledgable staff, as well as the systems and relationships in place, to provide you with a nearly turn key approach to drastically reduce the amount of time you spend implementing the Hassle Free Cash Flow Investment strategy. These two aspects of our business combine to deliver to our clients impressive returns on investment when measured in both Dollars and hours. For a free consultation to find out if our services and products are right for you, contact me at Until next time, stay sharp!

-Rob Kippel, Hassle-free Cashflow Investing Strategist

The Hassle-Free Cashflow Investment Spectrum

by Hassle-free Cashflow Investing Specialist – Rob Kippel

At its core, Hassle Free cashflow Investing has two fundamental investment strategies: buy-and-hold real estate and real estate secured notes. These two strategies are implemented in a way to reduce both hassle and risk, and then leveraged up as much as possible using long term fixed rate debt to increase returns through arbitrage and the destruction of debt through inflation. Each investor implementing this plan will have a different proportion of one strategy to the other depending on his personal investment goals, risk tolerances, resources, and macroeconomic expectations. On one end of the spectrum would be the investor who only owns a Hassle Free buy-and-hold real estate portfolio but no real estate secured notes. On the other end is the investor whose portfolio is comprised of multiple Hassle Free real estate secured notes but no ownership of rental property. Most people fall somewhere in between, implementing each strategy to some degree depending on their personal situation. To assist you in deciding how you would like to implement the Hassle Free cashflow investment strategy into your portfolio, if at all, I would like to compare and contrast buy-and-hold real estate vs. real estate secured notes and then examine some case studies of how people implemented the Hassle Free Cashflow strategies for their personal circumstances.

Buy-and-hold real estate is a tried and true strategy to building wealth. Individuals have varying degrees of success with the strategy depending on how they go about building their portfolio, but the underlying strategy is sound. Profit sources from this strategy include cashflow, appreciation, amortization, and tax benefits. At Hassle Free cashflow Investing, we implement the buy-and hold strategy as outlined in David Campbell’s free e-book Hassle Free cashflow Investing which can be downloaded under the Investor Education tab at If you haven’t read this book yet, I highly recommend you do so as it can short cut your road to sustainable wealth by helping you start with a fundamentally sound strategy and helping you avoid the mistakes that will slow your progress. Buy-and hold real estate is the “slow and steady” approach. You will not be able to retire the day after you buy your first rental property. Due to the multi-dimensional nature of real estate, it may feel at times that you are spinning your wheels, but over many years, if done correctly, you will find that your are substantially more wealthy than when you started. Just as buy-and-hold is not “get rich quick,” it is also not totally passive either. When implemented according to the Hassle Free cashflow Investing principles, this strategy is quite often, as the name implies, hassle free. But, to be clear, hassle free does not mean effort free! You should be occasionally tending to your investment (or assuring that someone else is while you are not) to make sure it is performing optimally for you. Our buy-and hold strategy, due to its highly leveraged nature, has minimal positive cashflow (but no negative cashflow) and tends to have annualized returns on investment that are significantly higher than other hassle free investments. From a liquidity standpoint, real estate is not an investment you can liquidate at the click of a mouse or the dialing of a phone. Although it is possible to liquidate a property in less than thirty days, this usually requires a well established network of professionals and a drastic reduction in price. One side note that I wish to inject here is that should you ever require some liquidity from your rental property, you may want to consider selling that property using our Hassle Free seller financing strategy. This will usually make your property more marketable and command a higher selling price. In addition, you may wish to be creative and create two or more notes so that you can sell one note to raise needed capital while hanging onto the cashflow and continuing to profit from arbitrage on the rest. With regards to performance in inflationary or deflationary environments, our buy-and-hold strategy will tend to do extremely well during periods of monetary debasement and may underperform during periods of extreme monetary (and more specifically credit) contraction. To further explore this topic please refer to my earlier blog post Hedging Against Deflation in Inflationary Times.

The ownership of real estate secured notes, although less sexy, is a complimentary tool to the buy-and hold strategy in building sustainable wealth. Just as with the buy-and-hold strategy, when implemented the wrong way, it can be very risky and highly ineffective. We, therefore, follow the principles outlined in David’s second free e-book Hassle Free cashflow Lending to reduce risk and increase returns. Real estate secured promissory notes can be acquired in three main ways 1) purchased from an existing note holder 2) created through lending existing capital 3) created on the sale of property you own. To the uncreative, acquiring notes is a typical case of “it takes money to make money.” At Hassle Free cashflow Investing we have assisted many investors implement this strategy in their portfolio through leverage and arbitrage with very little money to start which substantially increases return on investment. The primary profit source of owning notes is cashflow. In the event the borrower defaults and thereby relinquishes the collateral to you there is the potential for significant capital gains and/or increased cashflow. The cashflow received from notes is typically higher than those from the buy-and hold strategy although you are giving up appreciation and tax benefits. Owning notes also tends to be much more hassle-free. Once the initial effort is put in up front, there is not much left to do but collect checks (and if you are really diligent, check on the condition of your collateral). If one of those checks fails to arrive, you will put in just a little more effort to receive handsome capital gains and/or more cashflow once you sell or own the collateral. Total return on investment on Hassle Free cashflow notes will typically be lower when compared to a Hassle Free buy-and-hold property but provide for better cashflow and higher cash-on-cash returns. The steady income stream provided by notes is subject to devaluation in highly inflationary times but potentially more relatively valuable during wide-spread deflation. In addition, seasoned performing notes tend to be more liquid than real estate although they will rarely sell at face value. To get top dollar for your note I would recommend selling to a non-sophisticated investor who would be quite happy with the secure steady stream of payments from your note and will probably over pay for it.

Case study #1
Malcolm and Elyssa are a young couple with two children, Maynard and Cynthia, and have decided to work towards financial freedom by building sustainable wealth through implementing the Hassle Free cashflow Investing strategy. Both have good jobs that they enjoy and plan to keep for the next 5-10 years while they implement their plan. Malcolm pays attention to the severe economic problems facing the US going forward and is absolutely convinced that the Federal Reserve will continue to destroy the value of the dollars they have earned and saved. He also realizes that his children will be paying for unprecedented and unsustainable federal deficits and political folly for the rest of their lives through taxes, inflation, and a lower standard of living. To him, this is unacceptable. Malcolm and his wife decide that although higher cashflow now from their investments would be nice, they really don’t need it and would rather invest for the highest returns and inflation protection. They find out that using the low money down strategies of Hassle Free cashflow Investing, they can purchase two properties per year! Since they have their jobs to support them, they don’t mind the smaller cash-flow and realize they will have substantially more for retirement and to pass on to their kids than if they were to invest in notes. Plus, if they ever wanted to boost their cashflow they know that the team at Hassle Free cashflow Investing can help them create a secured note by selling one of their properties using the Hassle Free seller financing concept. Elyssa doesn’t mind spending the few hours a month to call property managers, review and file documents, and pay bills because it makes her feel secure knowing she is in control as well as giving her a sense of pride from maintaining her nest egg. Malcolm was smart and keeps adequate reserves to allow him to hang on to his properties should problems arise. They both find comfort in the security they feel about their own future as well as their kids’ even in the face of uncertain and treacherous economic times.

Case study # 2
Anthony and June, are in early retirement and are a little anxious that they won’t have enough monthly income to have the type of retirement they had hoped for. Their home is paid for so their monthly expenses are low but they see the price of food and energy going up every year right along with their taxes while their social security checks stay the same and their 401k loses value. Their son Malcolm tries to convince them that this is only the start of inflation and that things are going to get much worse but they remember the stories their parents told them about life during the crushing deflation of the 1930’s and are worried it could happen again. They want to lock up a steady source of income but with interest rates and dividend yields so low they just don’t have enough money to be able to produce the income they need to enjoy retirement. They see how well their son Malcolm and his wife Elyssa are doing with their real estate investing and know it works but they just don’t have the time to wait for that type of portfolio to bear its fruit. Even if they did have the time, they don’t want to be too involved with their investments because they want to spend time together during their retirement to make up for the 30 years of 55+ hour work weeks. Besides, since Malcolm and his wife are actively implementing their investment plan, Anthony and June are not as concerned about having something to pass on to their son. Malcolm suggests to them building a portfolio of cashflowing real estate notes. With the help of the team at Hassle Free cashflow Investing, Anthony and June transfer their 401K’s into self directed retirement accounts. They use this money to make some Hassle Free Private Money Loans which immediately gives them a steady, reliable source of monthly income and a handsome cash-on-cash return. Although June was very hesitant, Malcolm finally convinced her that it was a good idea to take out a new mortgage on their home and invest the proceeds. She was almost crying on the way to the closing thinking of how hard they worked to pay their mortgage off and now they were just going to start all over again. When she received the check for $300,000 that had to be paid back over the next 30 years at 5% interest and she realized that they were now going to invest this money for monthly cashflow at 12% she was ecstatic! “Oh Anthony! We’re finally going to have enough monthly income to retire together!” She was in tears.

Case Study #3
Joe was a single guy who always knew real estate was the path to sustainable wealth and had read extensively on the subject. He didn’t really have a clearly defined strategy, he just knew he had to get started and then go from there. He had held a steady job for quite some time now and always paid his bills on time. As a result Joe had great credit. He knew he could get approved for a mortgage if he could only come up with a big enough down payment. His parents, Anthony and June, just came into a large sum of money after taking out a new mortgage on their free and clear home but they already had plans for investing it all to provide monthly income for their retirement. Joe knew his older brother Malcolm was having steady success with real estate over the years and decided to go to him for advice. Overhearing the conversation, Malcolm’s wife, Elyssa suggested to Joe “Why don’t you call the team at Hassle Free cashflow Investing to see if you can partner with your parents and use your credit to leverage some of your parent’s cash so that you can both profit?” Joe called the next day and spent the next two weeks excitedly exchanging emails and phone calls with various members of the team. Two months later Joe had closed on his first investment property and his parents didn’t even notice the higher return on investment they were getting because they were enjoying their retirement and lower cost of living overseas while Joe and his brother Malcolm managed their parent’s Hassle Free cashflow Investments portfolio. Joe slowly and steadily acquired more buy-and-hold properties like his brother Malcolm but every so often sold a property using the Hassle Free seller financing technique when he needed a cashflow boost in his portfolio. Today Joe owns a balanced portfolio
of buy-and-hold rental property and cashflowing notes, has enough cashflow to leave his job and work as a full time real estate investor, is protected against both inflation and deflation, and is financially free and independent. He has even elevated his financial status enough to be eligible to take advantage of some of the exclusive private placement opportunities only available to high-income and high net-worth clients of Hassle Free cashflow Investing.

There are countless scenarios like these, each one with slightly different details. I would very much enjoy learning the details of your story to assist you, if appropriate, in implementing the Hassle Free cashflow Investing strategy according to your needs. My time is free to you and there are no obligations. In addition, if you meet the requirements I can even set up a free one on one personal investment strategy consultation with professional investor and developer David Campbell! Please email me at or call (866) 931-9149 Ext. 1. I look forward to our conversation. Until next time, stay sharp!

Hedging Against Deflation in an Inflationary World Using Seller Financing

by Rob Kippel, Hassle-free Cashflow Investing Specialist

There is endless debate among economists right now on whether the US is heading for inflation or deflation. While these economists are content arguing back and forth, savvy investors are taking action. The stakes here are very high as being on the wrong side of this trade could be catastrophic while being correct could be outrageously profitable. Not taking a position and just sitting on the fence as most Americans are doing will be costly in either outcome.

Many of whom I consider the brightest economic minds are convinced we are on the precipice of an inflationary holocaust. I, for one, happen to agree but there are an equal number of great minds who have a very plausible argument for why the US will face crushing deflation in the years to come. Even those convinced of an inflationary demise for the dollar will often concede that we will experience a bout of deflation before we face the inevitable inflationary outcome.

Those placing all their bets on one side or the other will either end up tremendously more wealthy then they are today or completely wiped out. This is great if you came to the right conclusion but what if you are wrong? Or what if you were right but the trade goes against you just long enough so that you are unable to hold onto your long positions and you end up not profiting when you had the right strategy? This could certainly be the case if we were to see a severe bout of deflation prior to the spectacular inflation.

If you arrive at the conclusion that inflation is inescapable for the US, as I have, your knee-jerk reaction may be to structure all your investments to profit from Dollar devaluation. Although this position should be extremely profitable, the key is being able to hang onto it through a deflationary storm should it strike. This is where hedging through seller financing a portion of your portfolio can be effective.

A hedge is when an investor takes an opposing position to his core portfolio to help mitigate risk and decrease volatility. Although a hedge will usually lower your return slightly if your core position becomes profitable, it primarily serves to counteract loss on your core portfolio with profits made on the hedge position.

Let’s now see how we can place a hedge on our Hassle-Free Cash Flow Real Estate portfolio by becoming a lender through seller financing.

As David Campbell has shown us in previous newsletters (if you are not familiar with these articles, visit the blog page), purchasing highly leveraged undervalued cash-flowing real estate with long term, low fixed rate debt can be extremely profitable through inflationary times. This is one strategy I particularly like and personally employ in my portfolio, however, a large portfolio like this can get quite hairy during a bad bout of deflation and may cause you to actually lose a substantial amount of the portfolio that would have ultimately been profitable had you been able to hold on to it once inflationary economic conditions resume.

Becoming a lender through seller-financing is a tool you can use to weather the storm and hang on to your core portfolio while you wait for it to bear its fruit. During deflation, the price of your real estate as well as its stream of income will tend to decrease but the debt service remains constant making your debt load more burdensome. If your rental real estate becomes a negative cash flow that you must feed each month, the inability to keep up with the payments will lead to the loss of the property regardless of how much equity you have.

The same way fixed debt works against you as the borrower in deflation, it can work in your favor as the lender when you seller finance a property. As the holder of a seller financed note you will be receiving a fixed level of payments at the same time your expenses are going down in deflation, making the stream of income relatively more valuable. It is this relative increase in income right when you need it that can save a portfolio geared to profit from inflation.

In addition by selling a property with seller financing you will have locked in the price of the property at the sale which would have otherwise decreased during a deflationary episode. This protection does however come at a cost, as most hedges do. When selling a property with seller financing you do give up the other profit sources you would have realized had you simply held and rented that property (appreciation, amortization, and tax benefits).

In addition, in an inflationary environment the relative value of a fixed stream of income decreases as the cost of living increases. So you must ask yourself, “How much is the safety and protection of my portfolio worth?” This is a personal question and the answer will vary from person to person.

A final consideration is the performance of the hedged portfolio should we experience neither inflation nor deflation. The core portfolio of real estate described above hedged with your seller financed notes should provide you with steady returns and income in a normal economic environment. You will realize all the typical profit sources associated with buy-and-hold real estate as well as receiving higher levels of current cash flow from your notes.

Not all seller financing is created equal and it is important that you do it right. Here at Hassle Free Cash Flow Investing we have a world class team in place to help you successfully and properly build a real estate portfolio that can protect you and even profit from the coming inflation. We can subsequently help you increase your cash flow and hedge against deflation through seller financing some of those properties through our unique system.

The best part is that we can help you achieve this with little money down! This strategy is not suitable for everyone and is only applicable to those who are eligible. I would enjoy the opportunity to speak with you to determine your financial goals and eligibility. You can contact me and the team at Hassle Free Cash Flow Investing at (866) 931-9149 Ext. 1 or you can email me at Until next time, stay sharp!

Rob Kippel – Hassle-free Cashflow Investing Strategist

Secrets to a Higher Credit Score and More Importantly How to Profit from It

Secrets to a Higher Credit Score

and More Importantly How to Profit from It

By Professional Investor – David Campbell

Having a good credit score is an asset only if you plan to use it to make money.  I know people who consider their 750 FICO as a badge of honor.   A credit score is a financial tool, NOT a measure of self-worth.   If you aren’t utilizing your credit score to generate passive income,  does it matter whether your FICO is 570 or 750?   It’s like having a luxury car that is too precious to drive.   If your credit score is sitting idle in your garage, it’s time to put it in gear and make money with it!

Here are a few secrets to a higher credit score:

1.    A credit score above 680 gives you the ability to borrow money for investing.

2.    A higher credit score generally means you will be able to borrow cheaper money.

3.    Banks borrow money at a low interest rate (banks can borrow money for 1% or less).

4.    Banks invest the money at a higher interest rates (mortgage rates are around 5%).

5.    Banks earn 5% on money borrowed at 1% which results in a 4% profit on other people’s money!  It is good to be the bank.

6.    Your good credit score allows you to be your own bank!   You can earn 9% on money borrowed at 5% which results in a 4% profit on other people’s money.  If your credit score allows you to be the bank, what are you waiting for?

I can show you how to turn your good credit and a good job into $800,000 of loans at 5% secured by $1,000,000 of real estate WITH NO MONEY DOWN!   If you could borrow $800,000 at 5% ($40,000 year cost) and invest it at 9% ($72,000 income), you would have a 4% profit on $800,000 ($32,000).    If you can make an additional $32,000 from investing your credit score and no cash, why would you let your credit score sit idly in the garage?

If you don’t have a good credit score here are a few tips on how to get one.

1.    MAKE TIMELY PAYMENTS:  This seems obvious, but we sometimes forget.   Consider setting up your bills on automatic bill pay with an arrival date well before your due date. Credit companies typically will let you know when you are a few days late, but they don’t ding your credit until you are 30 days late.  If you get a “late pay” phone call, take it seriously and act right away because your time is running out.

2.    LOWER YOUR RATIOS: Keep your credit utilization  to about 25 to 35 percent of your available credit  The credit bureaus don’t like to see “maxed out” credit.  You can lower the percentage of your drawn credit to credit limit by either paying down your debt and/or increasing your maximum allowable credit limit. In other words, if you have a credit card that is close to its maximum balance, call the credit card company and ask them to increase the credit limit.  Tell them you would like them to do this without pulling your credit.  In addition to this, spread out your balances among your cards trying to keep the ratio between card balances and credit limit to 30% or less.  For example, let’s say you have 3 credit cards and $3,000 in credit card debt. If all the cards have limits of say $4,000, it would be best to put $1,000 on each of the cards than to have just 1 of those cards with the full $3,000 balance.

3.    MINIMIZE CREDIT INQUIRIES:  Applying for credit makes your credit score go down. Applying for new credit is like taking one step backward to go two steps forward.   Once you attain the credit that you applied for, and you make regular on-time payments, your credit score will go up.  If you are shopping for a major purchase such as a car or mortgage, many credit inquiries within a very tight time span are usually only counted as one credit inquiry.   If you are applying for a mortgage, you can get many of your questions answered without having your credit pulled, but to get a definitive credit decision a mortgage broker will always have to pull your credit to understand your debt to income ratio as well as your actual credit number.  Giving your mortgage broker a copy of your credit report can reduce the number of credit inquiries when pre-qualifying for a loan, but a mortgage broker will always pull your credit report once when they submit your loan and sometimes a second time before the loan funds.   If you are waiting for a loan to close, don’t apply for new credit anywhere else until your loan funds.

4.    AGE YOUR CREDIT: Never cancel a credit card that is more than 2 years old.  Having a “seasoned” account is a big plus for you.   If you have children, get them a credit card as early as possible and teach them to use it responsibly.   Length of responsible payment history is a major consideration in the strength and durability of your credit.  Sometimes you can create additional credit history by adding yourself to the account of a family member who has a long and successful credit history.   CAVEAT:  This can become a liability if the payment history of your family member is poor or becomes poor in the future.

5.    LOOK FOR ERRORS:  Studies show that 79% of all credit reports have errors on them.  If you have errors on your credit report you can try to fix them yourself through the credit bureau website or seek the help of a credit repair specialist.  If you are looking for a recommendation, I know an excellent source I would be happy to refer you to.

You see, our relationship isn’t just about helping you find an amazing investment property; that’s a very small part of what we do. I want to make sure you have access to the financial education you need to make smart decisions and a world class team to support you in the execution of your investing plan.

Thanks again for letting me enter your world each week and thanks for the referrals of your friends and family members. I appreciate it and so do they.

If you would like to monetize your good credit, don’t wait, give me a call soon to talk about your options.

To your success,

David Campbell

(866) 931-9149 Ext. 1


Keyword: Higher Credit Score

One of California’s largest employers moving to Dallas, TX by 2012.

By George Avalos
Oakland Tribune
Copart Inc. will move its headquarters out of  Fairfield and shift its head offices to Texas, the  company said Thursday, a departure that jolts  California’s already wobbly economy.

The company, one of the Bay Area’s largest public  companies, employs an estimated 334 workers at its  Fairfield facility. Copart will exit the current  headquarters as soon as late 2012.

Ranked by revenue, Copart is one of the 80 largest  public companies in the nine-county region. Its  market value on Thursday was $2.79 billion.

“We will relocate our corporate headquarters to Dallas,” said Vinnie Mitz, Copart’s president. “The relocation will be carried out in phases beginning early in the summer of 2011 and will continue over the next two years.”

On Jan. 3, Copart sold its 100,000-square-foot headquarters building to Partnership HealthPlan of California. Partnership HealthPlan paid $16.5 million for the building and agreed to lease the complex to Copart for the time being, said Dave McCallum, manager of the market department with Partnership HealthPlan.

Partnership HealthPlan hopes it can move into the building in December 2012, McCallum said.

“It’s unfortunate that California is losing these kinds of companies,” said Brooks Pedder, managing  partner with Colliers International, a commercial realty firm. “Copart’s departure is all about the cost of doing business here.”

Copart has become a stalwart in the Bay Area corporate landscape. Over the 12 months that ended in October, the company  reaped $800 million in sales and $154 million in profits.

The company has managed to marry the old-school business of vehicle salvage with the Internet’s vast reach. The offspring of this union are online auctions for vehicles that have been wrecked or stolen. Copart has parlayed the digital bazaar into an unbroken string of annual profits that stretch back to at least 1992.

“The decision to realign our business and corporate operations is in part due to the dynamic growth opportunities that exist in our changing marketplace,” Mitz said.

Copart will keep three administrative units and certain other operations at what will become a divisional hub in Fairfield. The company will transplant all other corporate functions to new divisional hubs in Grand Prairie, Tex.; Hartford, Conn.; and the new Dallas headquarters.

The company hopes to be able to better connect its field operations with its customers and potential clients.

“Diversifying our office locations allows Copart to be closer geographically to our customers and clients, resulting in greater operational efficiencies and improved customer service,” Mitz said.

Copart executives decided to move its headquarters out of Fairfield in the wake of the state government election results in California in November, said people familiar with Copart’s exit strategy.

“The state’s regulatory environment is as uncertain as ever,” said Gino DiCaro, executive director of the California Manufacturers & Technology Association. “The tax burden for a company to operate a business in California is 13 to 14 percent higher than the rest of the country.”

In December, DiCaro wrote in a blog that the eyes of Texas are on California’s manufacturing jobs. He noted that in 2010, Texas added 1,100 manufacturing jobs for every 1 million residents of that state, while California lost 32 factory jobs for every 1 million Golden State residents.

DiCaro said he thinks the California business climate and the state’s economy face twin foes.

“It’s not just the movement out of California, it’s the new growth that is not occurring here,” he said.

Part of our series of articles on investing in Dallas


REAL ESTATE CENTER AT TEXAS A&M UNIVERSITY:  Home prices increased in the Dallas metropolitan market in 2010, even the prices of distressed homes, according to recent Real Estate Center research.

Center researchers found that homes sold by “typical” or “nondistressed” owners in 2010 were 1.2 percent higher, on a per-square-foot basis, than in 2009. The research also revealed that homes sold by “distressed” owners increased by 2.51 percent in 2010.

As part of a major research effort, the Center combed through more than 500,000 sales records from 2003 to 2010 (51,593 in 2009 and 46,315 in 2010) in the North Texas Real Estate Information System (NTREIS) database to get a more precise view of what has been happening to “typical” and “distressed” home prices in the Dallas-Fort Worth-Arlington Metropolitan Statistical Area (MSA).

The data included all distressed sales reported by NTREIS between $50,000 and $1 million during the eight-year period and all nondistressed sales between $75,000 and $1 million. Distressed sales ranged from a low of 5.7 percent of all sales in 2003 to 16.3 percent of all sales in 2010. In general, a non-distressed sale was sold by an individual and a distressed sale was sold by a financial institution or intermediary.

For more on the researchers’ findings, read the Center’s online news release.

Part of our series of articles on investing in Dallas

Lending Other People’s Money For a Profit

In my last newsletter, I wrote about making passive income from seller financing.  If you missed that newsletter, you can read it on my blog by clicking here.  The idea is to buy a property with conventional financing from a bank at a 5% interest rate, and then immediately resell the property to an occupant at a 9% interest rate.  Assuming you can borrow money at 5% and lend it out at 9% with little to no risk, how much money would you like to borrow? If you’re making 4% profit on $500,000, that’s $20,000 a year of passive income from the banks money!

Would you like an extra $20,000 of cashflow?

For a lot of people, $20,000 of additional passive income would mean instant retirement.   Maybe it is just enough for your spouse to quit their job.   Maybe you could cut back your work schedule so you’ll be home to pick up your kids at school every day.   Maybe it would give you the security cushion you need to quit your job and become self-employed.  Maybe you could just start living life first class instead of coach. Whatever you do with the money is up to you, the important thing is to get started on a plan of action right away.

Sad, but true. Most people never take action.

I have a live deal for you to consider, and if you are interested you should act right away.  It’s not that I can’t find a similar deal in the future, but as the saying goes, a bird in a hand starts your passive income sooner rather than later…  OK, maybe that’s not the saying your were thinking of, but you get the point!   The more important concept at play is the the law of diminishing intent.  Time has a funny way of eroding your momentum. If you take action on something as soon as you form the intention, you are likely to be successful.  The longer you wait from the moment you are excited, the less likely you are to do anything at all. So, don’t wait!

If you’d like more passive income, here is a live deal for you to consider.

house in mesquite, Texas
Above is a three bedroom, two bath house with a beautiful swimming pool built in 1973 located in a nice middle class suburb of Dallas called Mesquite.  To a savvy investor, the details of the house will be unimportant. The interesting thing about this house is the DEAL STRUCTURE.   A family wants to own and live in this house, but they need to rent your credit to do it.   Here is how it works:

YOU and your good credit buy this house for $86,000 with a $17,200 down payment (20%) and a $68,800 bank loan (80%) at 5% interest.   The monthly principal and interest EXPENSE on the money you borrowed is $369.

A FAMILY buys your house for $86,000 with a $17,200 down payment (20%) and a $68,800 seller financed wrap note (80%) at 9% interest.  The principal and interest INCOME on the money you loaned is $554.

YOU collect $554, pay out $369, and KEEP $185 a month.  That’s a profit of $2,220/year.  Your profit comes from borrowing from the bank at 5% and lending to a family at 9%. Nine percent income less five percent cost of funds equals a four percent profit on the bank’s money.

Your total investment is about $3,500 in closing costs to make $2,220 per year profit.  That’s a 63% annual return on investment!!!  In 19 months, you have all your money back and your return becomes INFINITE!!!

BUT, you say… What if the buyer defaults on the loan?  Whether the family pays their mortgage or not, a savvy investor will make sure it is a win for him either way.   If the family doesn’t pay their mortgage, you foreclose on the house and either make it a successful rental OR resell the house to someone else in exactly the same way!  You could collect $17,200 in down payments twice!   While you want your borrower to be successful, in reality you will make more money if your borrower defaults.  The borrower also has a prepayment penalty in the note to ensure if they pay you off early from a sale or refinance, you’ll make enough profit to make the transaction worth the effort.

If you have at least $25,000 and you can qualify for a conventional loan, you should be able to repeat this process over and over again. Within a few days you’ll have your down payment back from your buyer/borrower, and within 19 months you’ll have all your money back.   If you can’t qualify for a loan, you can still play!   I have commercial lenders who will lend non-recourse money to your entity with 35% down and 7.25% interest on a 30 year fixed rate. Commercial lending eats up a lot of your cash flow, but it allows people who are “Fannie / Freddied” out to participate in this opportunity.  Commercial lending is available to non US residents as well.

You could implement this business plan in your own market, but why?   Dallas is one of the strongest real estate markets in the country.  The population is booming, the job market is stable, and many credible experts are predicting a looming housing shortage in Dallas.  While choosing a strong housing market to invest in is important, you are ultimately not investing in real estate.  You are investing in the spread between your borrowing rate and your earning rate (arbitrage).  You loan is secured by an asset with 20% equity which protects you from default.   You are investing in a family who would rather own than rent, but if you took the house back it would make an excellent rental and you’ve got instant equity in it.

While 9% might seem like a high interest rate for a mortgage, the family living in the property is WILLING and ABLE to pay an extra $185/month because there are no other financing options available to them.  The occupant has credit challenges and 9% seems like a great deal to them.

I’ve done the hard work of finding an excellent property with a qualified buyer who has a substantial down payment.   My team will handle the logistics of the entire transaction.  A law firm will draw up the documents, a title company will handle the escrow, and all of these costs are paid by your buyer / borrower.  Even after the sale, our team can service the collection of your mortgage for you.  Ladies and gentlemen, this is about as perfect as Hassle-free Cashflow gets!

If you are ready for $185/month of passive income (or even better how about $185/month x 10 properties), please email me right away!  I expect a high volume of calls on this opportunity.

While this isn’t the only time an opportunity like this will come along, the law of dimishing intent says act on your intention now or you probably never will.

To your success!

David Campbell
Professional Investor, Developer, Financial Mentor