Are you ready to speed up your wealth and success? Then you have to read this! The CashFlow Express can help you. Inside we cover stocks, real estate, gold and other passive income generators. READ IT TODAY! **by the publishers of Realty411 Magazine **

1. Ca$hFlow
EXPRESS
No. 1 / Vol. 1 2012 Passive Income for Today & Tomorrow FREE
Learn How to Create Stock Investors Manifest a
Market Wealth Today “Cashflow” Mindset
By Doug Carver of real estate investing, trading stocks,
Organizer Pasadena and Burbank building a strong MLM business, etc.
I
Cashflow Meetup Groups You will not succeed. It’s like trying to
grow corn in a field of sand. The seeds
can remember my first time play- will not germinate and you’ll end up with
ing Robert Kiyosaki’s Cashflow next to nothing to harvest in the fall.
board game about eight years How, you ask, does this relate to the
ago and how it Cashflow game?
started a chain Well, after playing
of events that continues the game a bunch
to this day. What stuck of times I learned
with me most was not the the “how to” of
“how to” of playing the getting out of the
game but the people that Rat Race, but I still
I met at the event. These was not able to take
were not like the normal what I learned from
people in my life that the game and apply
By Tyrone Jackson companies and products with which would tell me I was crazy Dougthe Cashflow gameChris Hanson dis-
play
Carver (left) and
to group members.
it to my real-life fi-
you are familiar. for trying to start my own nancial situation.
TheWealthyInvestor.net
Yes!
If you’ve ever opened a can of real estate business or However, I real-
You can be Coca Cola on a hot summer day and that financial freedom was impossible ized that the time I was spending with my
rich from felt refreshed and invigorated, why without a steady well-paying job. The new Cashflow group friends was chang-
owning real not own the stock? It’s a product you people I met were excited about learn- ing the way I thought about money and
estate and trading stocks. know with a story you understand. ing and expanding their knowledge on my financial future. I no longer viewed
We’ve all heard the story of the When I say “a story you understand,” how to achieve financial freedom. They the stock market as a giant rigged sys-
little old lady who lived modestly I mean to say that you understand were active investors in real estate and tem for losing money. I began to see the
and worked as a school teach- how the Coca Cola the stock market. They were small busi- tremendous opportunities in the sinking
er for forty years. She never Corporation makes ness owners with a passion and vision real estate market even as many people
earned more than $35,000 per money, or to ex- for creating more financial success in I knew were losing money on deals that
year, owned a modest home, press it in Wall their lives. Overall, they had a mindset had gone bad. Overall, I saw for the first
and shared her life with two Street terms, you for prosperity that I like to call a “Cash- time opportunities all around me to cre-
cats. Once she died, her rela- understand how flow” mindset. ate wealth even as the newspapers talked
tives discovered a $150,000 the company earns A lot of people complain that Robert constantly of the “Great Recession.”
life insurance policy and $1.5 revenue. The more Kiyosaki in his books and programs does Today as a result of my ongoing in-
million in stocks that she left bottles and cans of not provide the specific details on how volvement playing and organizing local
to the elementary school’s Coke that Coca people should implement his strategies Cashflow events in Southern California,
scholarship fund. Cola sells around to create financial freedom. Truth is he I have a thriving real estate investing
The national media loves the world each day, never spells out a step-by-step “how to” business. It was after speaking with one
to air these stories. It seems the larger the com- for building long-term financial freedom. of my Cashflow friends who was a real
there are several old ladies pany’s profit. Over What he does teach is far more impor- estate investor that I was encouraged to
who fit this seemly unique the past ten years Coke stock (symbol tant, and that is how to create a “Cash- start wholesaling distressed properties. It
profile year after year. How could KO) has risen from around $40 per flow” mindset. Kiyosaki describes it in turned out to be a great decision. More
that be? share to a high of $71 — $1000 in- his book Cashflow Quadrant moving recently, I’ve begun to learn how to suc-
Investing in stocks is not the vested in Coca Cola stock ten years your mindset from the E (employee) and cessfully trade in the stock market using
world’s most challenging task. In ago would be worth $4,100 today; S (self-employed) side of his Cashflow options. As a self-proclaimed real estate
fact, at its core, it’s very simple. The $10,000 invested in Coca Cola stock quadrant to the B (business owner) and “zealot”, I never would have dreamed of
truth is that the stock market creates would be worth $41,000 today. I (investor) side of the quadrant. In lay- investing in the equity markets. Howev-
millionaires every year. Investing in If you spend more than $100 per man’s terms, it’s the mental shift from er, after playing Cashflow 202 with my
stocks, with wealth in mind, is easier year eating fast food, why not own someone who seeks financial security Cashflow friend who is an active trader
than you think. the stock? Over the past ten years at all costs to someone who can confi- and learning about his trading system, I
McDonalds stock (symbol MCD) has dently and knowledgably take measured was able to see the opportunity before
Invest In What You Know risen from a low of $15 per share to a risks. This is a simplistic definition but a me. I now fully expect that investing in
high of $95 per share. very important one to understand. With- the markets will be a huge part of my fu-
Wanna be a good stock market in- out the correct mindset, it really doesn’t ture financial success in addition to my
vestor? Keep it simple and start with Continued on pg. 12 matter how much you learn the “how to”
Continued on pg. 2
Personal Finance News from the Publishers of Realty411 Magazine - www.Realty411Guide.com

2. Will Big Money Run
Away with CashFlow
Ready to Make an Extra $5,000 to Real Estate Investments?
$30,000 Every Month?
“Your wealth is in your thinking” is the mantra trumpeted most
by stock market teacher and trader Tyrone Jackson. For the past five
years, Mr. Jackson has been helping creative artists and self-directed
investors produce monthly residual income & build long-term wealth
A great financial opportunity does
not stay under the radar for long.
The side road with less traf-
fic gets crowded pretty soon as drivers
hear about it and jump
and-hold single-family real estate. This
has caught the attention of big money:
funds, institutional investors and high-net
worth groups. Distributed single-family
in the stock market. His Wealthy Artist/Wealthy Investor program exposes both the experienced off the freeway. High
trader & novice to the powerful concept of monthly residual income.
yield cash flow real es-
tate Investments may
Join Tyrone & the CashFlow Express Team
be headed for a similar
on February 5 for their Success 2012 Seminar
fate.
This is a FREE WORKSHOP, but guests Retail investors have
must RSVP by calling 310.499.9545 had this opportunity
staring them in the face
for a while, and many
have taken advan-
tage of it. Retirees or
Join BILL GATTEN at his next event and learn the people about to retire,
KEY TO CAPITALIZING ON FREE REAL ESTATE individuals suffering
from ‘market gyration
(Acquisition and Ownership) in This Crazy Economy! trauma’ and high-net-worth individuals real estate investments are quickly be-
seeking portfolio diversification have all coming the ‘unapartment’ portfolios of
We will teach you how our “TRIAD APPROACH” can been adding cashflow residential real es- these funds.
provide the professional real estate community with a tate to their portfolio.
SAFE VEHICLE FOR ACQUIRING, SELLING AND So what should the retail
DEALING WITH ALL TYPES OF REAL ESTATE. So what changed? investor do?
Like all markets this one is moving be- The retail investor should take action.
Learn more at www.LandTrust.net yond the early adopter stage. And the fac- This is still a fragmented market that al-
or call 1.800.409.3444 tors that have made this a great investment lows an investor to own one, two or
opportunity are compounding. There are three properties. They cannot do this in
more distressed assets hitting the market multifamily commercial real estate other
- Call Or Visit Our Website for Upcoming Educational Training - with a larger shadow inventory waiting in than by investment in a fund or a REIT.
the wings. Morgan Stanley just published But it’s important that investors act pru-
dently. This means
contents
not investing in their
own backyard favoring
proximity over return,
not investing with fly-
by-night property sell-
ers who peddle ‘high
1 Create Stock Market Wealth 6 Cash Versus Cashflow return’ properties and
then disappear leaving
1 Have a Cashflow Mindset 7 Calculate Your ROI the investor holding
2 Will Big Money Run Away? 8 The Nested Action Cycle the bag. And not doing
thorough due diligence
3 Six Tips for Faster Wealth 9 Investor Spotlight on the area, the prop-
erty and the provider.
4 Focus Versus Diversification 10 Resource Directory The HomeUnion Services team are ready to assist new investors.
Finally, they should
5 Jump Start Success 11 Inside Our Expos a report that suggests the U.S. is moving not buy the property from one entity and
towards a rentership society with home have another entity manage their invest-
ownership declining to 59%. A recent ment. In other words, the retail investor
Our Goal is to Educate, Motivate & Inspire New Investors Mortgage Bankers Association study says has to do the very things that the large
Realty411
that home prices may have hit bottom. funds do before they invest.
This means that investors have a grow-
ing number of properties that they can buy Discover a whole new way to unleash fully-
cheaply and then select from a large pool managed, high-income cashflow real estate
ADVERTISING
FOUNDER
Manifest Media Partners
CashFlow Express is published in San- of qualified renters. It all adds up to stable investments, call (866)732-3220 or email:
Linda Pliagas ta Barbara County by Manifest Media
pliagas@msn.com 310.994.1962 Partners. ©Copyright 2007-2012. All high yields for people investing in buy- cashflow@HomeUnionServices.com
EDITORIAL STAFF EVENTS & EXPOS Rights Reserved. Reproduction without
Lori Peebles Lawrence Ruano permission is strictly prohibited. The
Anita Cooper Wendy Pineda opinions expressed by writers and col-
CALIFORNIA DISTRIBUTION
CashFlow Mindset, pg. 1
Andre Sanchez umnists are not endorsed by the pub-
Brianna Bertrand Professional Distribution Solutions lishers and/or editorial staff. Before in-
COPY EDITOR 1.877.418.6500 vesting in stocks, bonds, mutual funds,
Anita Cooper NATIONAL DISTRIBUTION gold, other securities and commodities real estate activities. tively pursuing financial freedom and
KJ Banks: 805.377.6328
PHOTOGRAPHERS and/or real estate, seek the advisement Robert Kiyosaki’s Cashflow 101 and see the world full of financial opportu-
Sam Green PUBLISHED BY of a trusted financial adviser, attorney
John DeCindis Manifest Media Partners or tax consultant. Investing is risky busi- 202 are great boardgames to expand nity and money-making possibilities.
PRODUCTION ness and may result in loss of capital.
Augusto Meneses
SUBSCRIPTIONS/INFO:
310.499.9545 Please invest responsibly. your financial intelligence, but I hope By hanging out with these folks at
WEB DESIGN Join Our VIP Social Network: PRINTED IN THE USA. you can now see they are the basis for your local Cashflow group, I know
Diggs Design http://realty411guide.ning.com GOD BLESS AMERICA
so much more. They create a frame- you to will begin to develop your own
Connect to our virtual network ~ Search for us here: work for building lasting relationships “Cashflow” mindset and begin to see
with people who have a “Cashflow” real changes in your financial future.
mindset. These are people who are ac-
CashFlow Express • Page 2

3. publisher’s note Be A Guest at a FREE
6 KEYS FOR
Foreclosure Workshop
with Lloyd Segal,
financial
California’s Foreclosure Expert!
To learn more about a
freedom
FREE Foreclosure Workshop
near you, please call: NEW BOOK
888.285.0101 Released
April 2012!
By Linda Pliagas, editor & publisher ForeclosureWorkshop.net
E
vestment. For example, if you are
veryone a first-time home buyer (or even an
yearns for empty nester), be open to the idea of
abundance purchasing a duplex or other multi-
and financial family property instead of a typical
security, it is a human single family residence. This way,
desire we all share. It is you can live in one unit and rent out
a motivation ingrained the other for income. As a landlord
in us as part of our myself, I know it’s not easy to live
survival mechanism. near tenants, but if you screen your
While we all have this prospective renters correctly, it will
in common, only a lim- reduce future nightmares. Be smart,
ited few ever actually reach true financial let other people pay off your mortgage!
security. The statistics can be depressing. You can always save money and then buy
According to the Retirement Confidence another home later, after you build a pas-
Survey (2006), 53% of Americans have sive income stream.
less than $25,000 in retirement savings.
Plus, 30% mistakenly believe that they 2. Increase Your Formal AND Finan-
will only need $250,000 or less in total cial Education. Did you know that earn-
retirement savings. ing a bachelor’s degree can increase your
One of the problems in our society is income by $25,000 annually? Plus, it gets
a lack of discipline in regards to saving. better: According to Census Data, earning
In fact, a recent study by Harris Interac- a graduate degree will net a person an-
tive found that 57% of households do not other $20,000 per year — that’s $45,000
even have a budget (2009 Financial Lit- more, year after year! Now, don’t com-
eracy Study). plain about the high cost of education or
In my 20 year plus career in journalism, how “hard” it is to go back to school. My
I have interviewed many successful and former neighbor was her 50s, running
wealthy people, from her own business and
celebrities to company attending graduate
CEOs. Undoubtedly, part
of the perk to this profes-
school part-time. It’s
never to late! Real Estate
sion was being able to
unlock their secrets. I’ve
compiled a list of impor-
It’s also important
to keep in mind that
universities do NOT
Syndication Lawyers
tant guidelines, which teach people how to Private Placements • Group Investments
were followed by many get rich. So on top of LLC/Partnership Agreements • All 50 States
of those who transformed your formal educa-
their mediocre life and tion, start taking class-
average paychecks into Linda with real estate mogul & educator es about investing. www.SyndicationLawyers.com
Dave Lindahl (www.REmentor.com)
extraordinary wealth. Financial classes are
These steps are not taught at most adult For information, call: 949-855-8399
easy to follow, but they will get you started schools and colleges for a nominal fee.
on a disciplined path and lead you toward I have also attended real estate seminars
creating a wealth-conscious mindset. for many years and have learned great tips
1. Reduce Your Household Expenses.
from top mentors, such as Dave Lindahl.
Looking for a Turnkey Rental in Kansas City?
Living in California, we have some of 3. Be an Aggressive/Conservative In-
the highest real estate prices in the na- vestor. Although it may sound like an
tion so reducing living costs can be a sac- oxymoron to be both aggressive yet con-
rifice. One move that I have seen many servative, it isn’t. It’s all about planning.
real estate moguls make is that they start
off their portfolio with a multifamily in- Continued on pg. 9
ebsite
The W nched Sign Up Online
t Lau ut
tha Deb
Our zine! for our Pocket
Maga
e-Mail Listings!
CASHFLOWCOWS.com CashFlow Express • Page 3

4. Focus vs. Diversification your control over your investments. It’s
extremely important to continue to in-
crease your financial intelligence in order
Diversification is not required if a person
knows what they are doing.” So if diver-
sification is a protection against ignorance
A CPA/Investor’s Analysis
to protect yourself. Unfortunately, finan- then when you diversify who’s ignorance
cial intelligence is not taught in schools are you protecting yourself from? Your
because such a large portion of the popu- ignorance and your financial advisors’
lation, including teachers and politicians, ignorance? Focus, not diversification, is
do not have a very high financial IQ. the key to more sophisticated leverage,
By Mathew Owens, CPA vesting in non-paper assets (i.e. not mutu- When financial advisors say that an higher returns, and lower risk.
www.ocgproperties.com al funds or CDs) allows you to use lever- increase in returns means an increase in The point I am trying to make is that
M
age as well, which increases your wealth risk, they are right when speaking about if you increase your financial intelligence
ost of by making your the paper assets they recommend to inves- about specific asset classes, like real es-
what money work harder tors that they make major commissions tate, you will learn how to control your
h a s for you. Most finan- on BEFORE showing performance. They own financial security and wealth cre-
been cial planners will are wrong when speaking for all assets. ation, instead of relying on some finan-
drilled tell you that using Financial advisors are simply salespeople. cial advisor who probably does not know
into our heads about in- leverage increases Most people invest in paper assets such as what they are doing. Look at the massive
vesting in mutual funds, risk. That is not al-
Most financial advisors
CDs paying down our ways the case if you
mortgage and diversify- have the right finan-
cial knowledge to
recommend diversification
ing is nothing but smoke
and mirrors. The financial control the invest-
services companies like ment and enable
Fidelity, Charles Schwab
and financial planners are
safety controls on
your leverage use. but they do not really diversify.
the ones making all of They will also tell
the money. The problem you that real estate
is that most people have is a risky invest-
very little financial edu- ment. The reason savings, stocks, bonds, mutual funds and wealth transfer that just occurred when
cation in order to invest for for that is that finan- index funds because they do not want to the market crashed while bailing out the
retirement properly so they hand over cial planners typically lack the financial take responsibility and control over their banks (i.e. the top 1% wealthy individuals
their money to someone they HOPE will knowledge about how to control real es- financial well being. All they want is to increased their wealth while the middle
have the right knowledge base to safely tate and make it profitable. Most finan- turn their money over to an investment class and poor decreased in wealth). This
increase their wealth. The problem is cial planners put people into paper assets advisor who hopefully does a good job. happened because most people do not
that these investment types are HUGE- where the investor does not have control Out of sight, out of mind. If people want have the financial intelligence to protect
LY RISKY. These types of asset classes, and therefore it is hugely risky to use le- more control, the first thing they need to themselves.
paper assets, do not allow the investor verage. In real estate investments the do is increase their financial intelligence Starting to get financially educated is
control. Then during market crashes, all value of the property should not be based and, hopefully increase their financial the key to wealth creation. So get to the
most investors can do is watch helplessly on the “opinion” of an appraiser but on controls and leverage ratios. bookstore and start reading. Take classes
as their wealth gets whipped out along the income that it produces through rents. Most financial advisors recommend di- on financial intelligence and ways to in-
with their financial security. The value of the rental real estate is de- versification but they do not really diver- crease wealth. It is key to your success and
If you have more control over your as- pendent on jobs, salaries, demographics, sify. First they only invest your money preserving your wealth so that financial
sets then you are not affected as much by local industry, and supply and demand of in one asset class, paper assets. Second, predators (i.e. the government, financial
market crashes. For example, if you in- affordable housing. In a housing crash, mutual funds are already diversified in- advisors, and large mutual fund peddling
vest in assets like real estate that produce the demand for rental units often goes up, vestments which are invested in a pool companies) do not take all of your wealth
cash flow through rental income after all which means rents increase causing the of good and bad stocks which does not away by investing it in asset classes that
of your expenses are covered, if the real value of your property to increase. You increase the value or decrease the risk do not allow you any controls over those
estate market and stock market crash you can control rental real estate and which of the investments. Professional inves- investments.
are still in great shape. While everything geographic areas you invest in unlike pa- tors DO NOT diversify. Warren Buffett
is crashing you are still receiving your per assets that allow no control. Finan- put it perfectly when he said, “Diversifi- To contact Mathew Owens, please see
rents and do not need to sell the asset. In- cial intelligence is the key to increasing cation is a protection against ignorance. OCG Properties’ advertisement below.
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CashFlow Express • Page 4

5. Jump Start a New Year of Success Cash vs. Cashflow, pg. 6
ating $10,000 of monthly cashflow?
If you get nothing from this article,
By Geraldine Barry tic but now as I grow yourself, this is a process it does not hap- please get this. First, if you ever expect to
Founder of SJREI and REI Voice and learn to navigate pen over-night. create wealth and experience any sort of
I
this game called life, I financial independence while you’re still
t’s a New Year — time to re- have come to embrace • Lastly, live in the moment — whatever young enough to enjoy it, you’ll need to
evaluate, improve and refine this gift that I have been you are doing give it 100% of your atten- adopt, embrace and implement a residual
our daily habits and actions blessed with every day. tion. Walking the dog, having tea with a mindset. Second, don’t get stopped in
for success. Small, incremen- How do I do that? I start friend, working, talking to your children - your pursuit of residual income by con-
tal changes can reap big rewards my day with a prayer of be present, enjoy that moment. Your fam- fusing the value of cash and cashflow.
in terms of productivity and busi- gratitude naming the ily and friends will love you for this level Making the transition from accumulator
ness opportunities. As a planner myself, I things that I am grateful for — my fam- of attention — very few people can truly to residual-incomer and creating wealth
understand the significance of establish- ily, my warm cozy home, my friends, a do this. Be wary of electronics they can can also take some time, but by maintaing
ing goals to create new outcomes. If we hot cup of tea, a great book, quiet time to be thieves of our time, and our spirit...the a focus on cashflow, the time it takes will
can break those down into smaller more think, process or write, my warm SJREI things that renew you are not material — be nothing in the remote vicinity of the 40
manageable components we can achieve business community. they are love, companionship, friendship, year traditional alternative.
results more quickly. By appreciating these things, and so family, community, giving back.
many other seemingly trivial things I am Be brave, do whatever it takes to ac- Matt Theriault is an author, entrepreneur
Here are some things to consider as
happier, more content and I realize that complish new results — Make 2012 your and host of the fastest growing real estate
you plan for another year:
what I appreciate grows more secure, and best year yet! investing podcast on iTunes. Visit www.
becomes more defined in my life. Geraldine Barry is founder and president EpicProfessionals.com for more infor-
• If you don’t like things in your life you
Try it — I think you will like it too. of SJREI Association the premier educa- mation and to retrieve his free real estate
have the power to change them by simply
tional and networking association for real investing course How to Do Deals - No
changing yourself — things don’t change,
• There are people who drag us down estate investors in the Bay area. Under Money Required.
but you can! Any little modification can
make a difference — an introduction of — nay sayers if you will. Remove those Geraldine’s leadership SJREI has grown
something new, an exercise routine, a dai- people from your life. If they are your from a half-dozen investors to a vibrant Dream of Retiring Early?
T WITH CONFIDENCE
ly reading schedule, journaling, or simply family members, show them a new way three chapter organization with over 400
to be by mirroring for them your great investors attending monthly meetings. Join our Facebook
bonding with your family.
new attitude. My Dad shared with me In addition to leading SJREI, Geraldine Group and Mingle
• How you present yourself to the world (he ran a company, and had a family of is the frequent host of the radio program, with Successful
makes a difference, how you look, how six daughters, two sons and a wife!) that Going Beyond Real Estate, a regular Investors who Share
E D I AT E C A S H F LOW
you speak, how you interact with others, sometimes he survived by “psychologi-
who you interact with, what you read, cally absenting himself” from negative
guest on the nationally broadcasted NT-
DTV, publisher of award winning publica-
Your Financial Goals.
Share Tips • Post Deals
what you spend your time doing. What situations. tion REI Voice Magazine, and producer
D iscover the lowest-risk, highest-quality residential investment properties in the Request & Give Referrals
is your message to the world? Using sophisticated methodology,youbest investment properties areout,
I am here, How do do that? Tune them of the annual Bay Area Real Estate Expo.
country. the Post Links • Interact with
ready to take on a new challenge an experienced investor and rehabbed beautifully to situations,
carefully selected by and I capitulate, get away from secure the Geraldine resides in Silicon Valley, and is
Nearly 3,000 members!
want to change the best tenants. With competent property management, and instant cashdon’t propel
world in a positive people and attitudes that flow, your the proud mother of Colin and Claire, her
investment pays worry-free dividends from day one. Remember to be gentle as
way... it is your choice. you forward. two children. Contact Geraldine Barry JOIN & POST TO THE GROUP BY EMAILING:
• I have always been incredibly optimis- you work on this and have patience with at: sjrei.geraldine@gmail.com retireearlywithrealestate@groups.facebook.com
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6. M
ost of America was to travel. For if someday doesn’t arrive, are just squeaking by and only 1% of the flow when you’ve got $30,000 of cash
raised in a household it’s not like you can go back and try again. population actually reaches the age of 65 staring you in the face? I agree, there’s
where the road to You’re essentially at the end of life’s road “wealthy.” A “residual” mindset is what nothing sexy about $300, it has little value
wealth and success once you discover if it worked for you or this wealthy 1% has in common. It has today. It might buy you a pair of designer
was paved with the not. And what if it doesn’t? Then what?! been said that success leaves clues. In this jeans or a fancy dinner and a bottle of
ideology of going to school, getting good There is a road less traveled that de- context, however, success is leaving evi- wine. However, $300 of cashflow to the
grades, getting a good job, investing 10% serves your consideration. Additionally, dence, isn’t it? residual-incomer has tremendous value.
of your income, maxing out the 401(k), you might want to know that it’s faster As more and more studies and research You see, as I’m writing this article, the
cutting up credit cards and clipping cou- and easier, as well. I’ll prove it to you. are conducted, the concept of residual in- financial institution ING is advertising a
pons. If this is you, STOP IT! That sys- The alternative road exists within a “re- come and its wealth-creating power are 1% interest rate on their money market
tem is broken. It’s this “traditional” road sidual” mindset. The group that chooses becoming more common knowledge by account. I choose to use ING as an exam-
to success that could potentially be the this road lives life quite differently. They the day. That being the case, one has to ple because it’s just about the most gener-
How to Create Wealth: Cash vs. Cashflow
By Matt Theriault, EpicRealEstateInvesting.com and www.REICcashflow.com
demise of society as we know it, if not wonder why more people don’t ap- ous savings account available today to the
the entire country itself. ply this knowledge once it has been average consumer. So I’ll ask you, “How
It’s no secret that the current economy learned. much cash would you need to deposit
is a trying one for most. However, for It’s simple, actually. People into that ING account to generate $300 of
some, it’s the most profitable and suc- looking to make the transition from monthly cashflow?”
cessful economy they’ve ever experi- “accumulator” to “residual incomer”
enced, or will ever experience again. confuse cash and cashflow. Within the $360,000!
Why are some succeeding today while real estate investing arena, this con-
most are not? What road are they travel- fusion can be clearly illustrated, and An ING money market account balance
ing? What are they doing differently? I here’s how... of $360,000 would have to be maintained
could draw your attention to a number One, among many, of the attrac- to generate $300 of monthly cashflow.
of differences between the two group’s tive attributes real estate investing In summary, $300 of cash is worth $300
actions, yet what ultimately separates the possesses is that it can produce two of cash, but $300 of monthly cashflow is
two is little more than mindset. wake up every day with a focus of creat- types of income. Real estate can produce worth $360,000 of cash sitting in the most
Those traveling that antiquated tradi- ing or managing systems to work for their large amounts of cash through short term generous savings account available today.
tional road to success possess an “ac- money as opposed to they themselves strategies like fix-and-flip and wholesal- Do you get the difference now?
cumulation” mindset. This group wakes working for their money. Their focus ing. Real estate can also produce smaller And here’s more... Which is a longer,
up every day and goes to work for their is placed on creating residual income, amounts of monthly cashflow through not to mention more more difficult, road
money. Their focus, whether consciously whether through a business system or longer term strategies like buy-and-hold to travel? Accumulating $360,000 of
or subconsciously, is placed on exchang- their money earning money itself. They and lease optioning. The accumulator cash? Or, creating $300 a month of cash-
ing time for dollars with the hopes at know that once their residual income ex- looking to transition to residual-incomer flow?
some point in their life their income will ceeds their expenses, the accumulation will frequently, if not always, choose a You know your situation, skills and re-
rise, and their investments will perform, of assets and the creation of wealth will $30,000 fix-and-flip cash pay out over a sources better than I do, but creating $300
to a level that someday they will have essentially happen automatically whether $300 a month buy-and-hold cashflow. Al- a month of cashflow not only sounds fast-
accumulated enough to retire. they get up and go to work or not; And though they have the greatest intentions of er and easier, it is do-able. It’s realistic, as
Sure, this mindset has worked for it doesn’t take 40 years for wealth to be becoming a residual-incomer, their accu- opposed to the traditional-get-rich-slow
some, but it’s failing the vast majority created in this manner, either... far from it. mulation mindset is so ingrained that they program that has the country by the balls.
of our population. The reason being is Contrary to the “risky” label this road to can’t resist the big cash pay outs real es- Alright, alright... I can hear it now. No,
that this vast majority doesn’t start ac- wealth is commonly given, it is the road tate offers. It’s their mindset that prevents $300 of cashflow isn’t going to make a
cumulating (i.e. saving, investing) early that gives you the greatest shot at creating them from recognizing the true value of dramatic difference in your lifestyle. So
enough or possess the discipline to fol- wealth. $300 of monthly cashflow. And because what would? $5,000 a month? $10,000
low through to the end. Accumulation Maybe this is news to you, maybe it’s the accumulator tragically confuses $300 a month? By performing the same math
takes time, a lot of time. This entire ap- something you’ve known for a while or of cash with $300 of cashflow, they con- with today’s interest rates, you would need
proach to creating wealth is based on a maybe it’s just plain and simple common tinue to exchange time for dollars always to accumulate and deposit $12,000,000
principle called “someday.” Unfortu- sense. Regardless of where you stand, in search of that next “flip” and never take of cash into that ING account to cre-
nately, someday never seems to arrive. one would be hard-pressed to formulate that first step toward becoming a residual- ate $10,000 a month of cashflow. Again,
And for the few of which someday does a solid argument against it. The writ- incomer. which is a longer more difficult road? Ac-
arrive, it’s a 40 to 50 year journey. ing is on the wall. Depending on which Can you blame them, though? It’s easy cumulating $12,000,000 of cash? Or, cre-
Contrary to the “safe” label this road source you reference, the “traditional” to get caught up in the moment, right?
to wealth has been given, it’s a risky road road is failing 90-95% of the country, 4% What’s so appealing about $300 of cash- Continued on pg. 5
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CashFlow Express • Page 6

7. [ Calculate Your ROI
Return On Investment [ written by
R
eturn on investment. tenant in place. chase price for this home was $85,000. Net Operating Income = $3,953.48
That’s the whole point If you did not There are two different ways we can go
right? Being able to have a leased here. Assuming we paid cash for the So, that’s a big difference right? You
accurately determine tenant in place, property, the ROI calculation would look bet. Let’s take a look at the difference in
what your dollar is producing is a you would con- like this: your actual ROI.
critical step. Not just after you’ve sider this cal- Remember, your Cash Flow is calcu-
made your investment, but it is culation as if it $8540 / $85,000 = .1005 lated against the dollar amount you have
also a critical step in making deci- were part of a invested. In this case your total out-of
sions on future investments. For pro forma. You So using these assumptions, we have an pocket investment is your down payment
instance, accurately predicting would have to ROI of 10%. You might be thinking to of $21,250.
the return on an “all-cash” pur- consider things yourself: “Wow, what if I managed the
chase, versus one that is financed like “Vacancy property myself, or eliminated the main- $3,953.48 / $21,250 = .1860
can produce very stark results. Rates,” “Rent Bumps,” and “Tax Con- tenance reserve”. These are great obser-
Let’s take a look at a typical income- sequences” and deduct them from your vations, but we’ll talk about that later. So you can see that by financing this par-
producing residential property. The first “Gross Rental Income.” ticular property, you are actually receiv-
step is to identify all the variables we are Financing vs. All-Cash Purchase ing an ROI of 18.6%.
working with. In this example, we are cal- Here is what this calculation looks like: Let’s assume you financed this property.
culating a rate of return over the course Gross Rental Rate + $12,000 Again, we’ll use some typical numbers to The Value of Your Time
of one year. Taxes - $1,000 illustrate. After your 25% down payment Remember those thoughts you had earlier
Insurance - $500 ($21,250), you leave behind an amount about reducing things like maintenance
Net Operating Income (NOI) Property Management - $1600 of $63,750 that is financed at 6% for 30 reserves or eliminating property manage-
Every month, you get a happy rent check Maintenance Reserve - $360 years. ment? As you can see, calculating your
in the mail. This is your “Gross Rental Net Operating Income = $8,540 ROI is a simple and powerful tool that
Income.” Now, let’s take a look at the Here is what your calculation would you can use to make decisions on poten-
cost of your investment. For most prop- That’s it. Simple right? When you hear look like: tial investments. But there is something
erties, these are pretty standard and easy talk about “Cashflow”, it is your NOI that Gross Rental Rate + $12,000 missing from this equation — the value
to identify. we are talking about. So, we have iden- Taxes - $1,000 of your time.
For this example we will assume the ba- tified our “Gross Rental Rate.” and our Insurance - $500 For some reason, we have the tendency
sics: Insurance, taxes, property manage- “Net Operating income” or “Cashflow.” Property Management - $1600 to consider our own time as some infinite
ment, and a maintenance reserve. We will Let’s go ahead and calculate our actual Maintenance Reserve - $360
also assume that the property has a leased ROI for the year assuming that the pur- Principle and Interest - $4,586.52 Continued on pg. 10
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CashFlow Express • Page 7

8. An Innovative Approach About Leonardo Management, Inc.
to Property Operations H eadquartered in Santa Monica, Calif., Leonardo Management was es-
tablished in 2008 by veteran real estate executive Daniel Cunningham
Leonardo Management & and has grown quickly to provide third party management services to com-
mercial office, retail and multifamily clients throughout California, Arizona,
Colorado and New Mexico.
the Nested Action Cycle Leonardo’s customer service and leasing was recently ranked #1 in the
entire country by Ellis Partners in Mystery Shopping and by utilizing its
proprietary software, which automates on-site operations. Leonardo also
offers a one-two punch in operations and leasing, which adds unprecedent-
By Daniel Cunningham to maximize profit, and dozens of distinct ed value to their clients.
President, Leonardo Management, Inc. roles a manager must play throughout the Representatives can be reached at:
O
week to get it all done. On any given day, info@leonardomgmt.com or at 213-674-4140
ne of the interesting things a manager may act as psychiatrist, coun-
about managing multi-family selor, contractor, lifeguard, janitor, police
apartments is that two simi- officer, accountant, salesperson, IT tech- vious company or whatever process was came Leonardo Management and we
lar apartment communities, nician, gardener, cheerleader, marketing easiest for them. Even when we did have started using the tag line “The Science
in close proximity, can have such vastly rep, and lawyer, just to name a few. I’m a defined process, I found that if we didn’t of Property Management” to recognize
different levels of success even though getting tired just writing about it all and, constantly audit compliance with the pro- this new, methodical way of approaching
the product might be quite frankly, it’s more than cedure, invariably it would be neglected operations.
comparable. Vacancies and some people can han- in practice. We adopted a very “reactive” But then we took things once step fur-
rentals can vary greatly dle if they aren’t able mode of management, whereby we would ther. Once the NAC was formulated and
among similar product to prioritize. It’s tre- get one problem under control just as the in use by the property managers within
types within the same mendously difficult next one would arise, with no opportunity Leonardo, we then used the same ap-
market. One property can to keep focused on to plan and get ahead of the game. proach to develop a software platform
appear well-kept and wel- what’s most impor- That was when I invented the “Nested which we called the Leonardo Intel-
coming; the other, com- tant when there are Action Cycle” (the “NAC”) approach to ligent Property Management System
pletely uninviting. Staff at so many demands on property management. I mapped out every (IPM). Now all our managers have to do
one property may convert one’s time. And when daily, weekly, monthly and annual task that is log into IPM every morning and it tells
a greater number of tours an individual proper- needed to be done and worked out a sys- them exactly what they need to be do-
into leases than the other. ty can be worth tens tem to track them so that we’d never drop ing that day, that week, and that month.
What makes the differ- of millions of dollars any balls on the operations side ever again. Like a friendly electronic Regional Man-
ence in a well-run, highly with revenues of sev- The shorter cycles nested within the longer ager looking over their shoulder offering
occupied property isn’t eral million dollars a cycles, ultimately producing a clockwork- guidance, IPM never takes a vacation,
luck, and most of the time year, losing focus for like conductor of management activity that never gets distracted with other issues at
it isn’t even related to the even just a short time covered the gamut of everything a manager other properties, and never, ever forgets
physical property itself. The most signifi- can have serious financial ramifications. needs to think about to efficiently and ef- what needs to be done. It sweats all those
cant factor, responsible for at least 90% I learned all this the hard way. I had fectively operate an apartment community. details I mentioned earlier and so now
of the success in this business, is the lo- been an asset manager most of my career By “dialing” the NAC to today’s date, the we can manage more properties with
cal staff running operations. Behind every — most notably director of asset manage- nested action cycles would instantly pro- fewer regional staff and still make sure
successful property is a manager who is ment for AIMCO, one of the largest own- duce all of the tasks a manager should be balls never get dropped. Owners can log
passionate about the job and, even more ers of apartment buildings in the United doing on that date. The NAC was difficult in any time to see what action items are
important, is thorough and consistent in States. So when the developer for whom to formulate, but amazingly straightfor- complete and when they were done. It
the day-to-day management—a manager I worked in 2007 asked me to start an in- ward in its application. Taken as a whole provides unprecedented transparency
who really sweats the details. house property management company it actually provides an entire year’s worth and our clients love it.
And therein lies the problem. There are for them, I figured it would be a piece of of explicit day-by-day activities that, when We’ve had lots of requests to license
a LOT of details involved in running any cake. followed in a regular, disciplined fashion, the Leonardo IPM and we’re taking an
apartment building, and trying to “sweat” I couldn’t have been more wrong. The without question will result in a meticu- honest look at that possibility. But until
all of them can cause burnout in even the year we took over property management lously managed property that will enjoy that time comes, Leonardo Management
best managers. You see, an apartment for the 1,300 units owned by that devel- higher occupancy, lower expenses, and benefits by having a real and proprietary
building is a self-contained, (hopefully) oper turned out to be one of the most chal- better resident satisfaction than neighbor- value proposition to offer property own-
self-sustaining business, and a compli- lenging of my career. My prior high-level ing competitors, with the end result being a ers — a way to do things better. You can
cated one at that. It has income and ex- “asset management” experience had im- more profitable business. read more about us and Leonardo IPM
penses, labor costs and marketing plans, printed a hands-off instinct, which left too The NAC gave us such an advantage in at www.leonardomgmt.com. We’d be
budgets versus projections, and even hu- many details to the on-site staff, and the operating these properties that I was in- pleased to offer a demo to any interested
man resources and legal matters that must wheels started to come off the cart. For spired to buy that management company property owner.
be dealt with. Often the lion’s share of co- every process that lacked a solid, well- from the developer and establish a pure
ordinating all this falls to a lone property documented procedure in place, the man- third-party management company of my To receive a free demo, please contact
manager. There are a bazillion moving agers would quickly default to whatever own, which would be based on the prin- Leonardo Management at 213.674.4140
parts, hundreds of levers to manipulate habits they had developed under a pre- cipals established by the NAC. That be- or email info@leonardomgmt.com
Your asset deserves a first-rate
Property Manager! www.SantaBarbaraREIA.com
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CashFlow Express • Page 8