Wealth
Vol. 1 • No. 3 • 2011
Serving the Needs of Accredited Investors - INSIDE: Information to Grow and Maintain Your Wealth
a Real Estate Hobby
Be a Private Lender,
Zero Down Investments
8 Turn
into a Profitable Business 10 Learn to make BANK! 18 Learn Our Secret Recipe
expenses. The result: at the age of 65, his
net worth is only about $33,000. And that’s
not the worst part...
If he stops buying and selling, he’ll have
no income to live on! That’s because he
has no income-producing assets. No posi-
tive cash flow. No annuity. And no equity.
Now he looks back at all of those years and
realizes he made a big mistake.
Most of the homes he bought in the mid-
90’s have doubled in value, but he sold
them all before they had a chance to appre-
ciate. He gave away hundreds of thousands
of dollars in appreciation. (And the IRS
took a third of his profits). He never bought
ture appreciation. After all, he always got
$5,000 plus upfront in “option consider-
ation” and he always sold his houses and
made a profit. Over a three year period, he
grossed an average of $109,00 per year.
Sounds pretty good, doesn’t it?
Unfortunately, the IRS calls him a “deal-
er”. That’s because he rarely holds a house
for more than a year. So his profits are
taxed at the painfully high rate of “ordinary
income”. For example, he sold a house
for a $29,000 profit, that’ll cost him about
$10,000 in taxes.
After overhead costs and taxes, Walter’s
“take home pay” is only about $60,000 per
year. And every dime pays for his living
PAGE 22 • 2011
Realty411Guide.com
I
started working in real estate with
my friend, Walter. We both started
out rehabbing houses, but there were
two big differences between us. First,
I was a lot younger; I was 32, Walter was
58. Second, I grew my net worth and cre-
ated a hands-free passive income. Walter,
by contrast, got hooked on buying and
selling. Why?
He was afraid of tenants, so he rarely
rented houses. When he did, it was always
on a “rent to own” basis. (He offered the
tenant a lease option). After all, single
family homes don’t generate much posi-
tive cash flow.
Walter didn’t mind giving up his fu-
How could a real estate “investor”
flip houses for eight years, only to
wind up with no assets, no cash
flow, and no income? by Dave Lindahl
Dave’s RE Tips
Real Estate
Continued on pg. 62
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