Real Estate Investors Are Making in the Current Boom Cycle Get to Know Us

How to Avoid the 7 Biggest Mistakes

Real Estate Investors Are Making in the Current Boom Cycle Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

DISCLAIMER:

THE AUTHOR OF THIS REPORT IS NOT A LEGAL OR TAX PROFESSIONAL AND THE INFORMATION HEREIN SHOULD NOT BE CONSTRUED AS LEGAL, TAX OR OTHER FINANCIAL ADVICE. THIS REPORT IS FOR INFORMATIONAL PURPOSES ONLY. THE AUTHOR DOES NOT ASSUME ANY RESPONSIBILITY FOR ERRORS AND OMISSIONS. MATTHEW BOWLES AND MAVERICK INVESTOR GROUP, LLC SPECIFICALLY DISCLAIM ANY LIABILITY RESULTING FROM THE USE OR APPLICATION OF THE INFORMATION CONTAINED HEREIN. IT IS THE DUTY OF ALL READERS TO CONSULT THEIR OWN LEGAL, TAX AND FINANCIAL PROFESSIONALS REGARDING THEIR INDIVIDUAL SITUATION AND APPLICABLE LAW BEFORE PURCHASING ANY REAL ESTATE. BUYING REAL ESTATE INVOLVES RISK WHICH BUYER ASSUMES. ALWAYS CONDUCT YOUR OWN DUE DILIGENCE.

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Introduction

Understanding the Seismic Shift in Today’s Residential Investment Property Market

The next great real estate boom cycle is now thoroughly underway.

But today’s real estate expansion cycle has some unique differences from previous ones, including a “seismic shift” already underway in the residential investment property market which is localized, fragmented and imperative for you to understand for 2 reasons:

1. It will be the primary driver for a huge transfer of wealth over the next two to five years, and smart real estate investors that make the right plays will be able to make (or recover) their fortunes, reduce their tax obligations dramatically, hedge against inflation, and create substantial streams of passive income that provide increased freedom, time and mobility, so that you can take your lifestyle design to the next level (whether that means improving your golf game, jet setting around the world, volunteering for causes you care about or simply spending more time with your family).

2. Investors who make the wrong decisions will lose big because the reality (that most real estate gurus and investment property promoters won’t tell you) is that most real estate is not a good investment. In every real estate cycle people who don’t understand how to buy right continually lose their shirt....again and again, like clockwork, with mistakes that are easy to avoid. Don’t be that guy (or gal)! Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

My name is Matt Bowles, and I have been investing in residential investment property for over a decade, during which time I personally purchased millions of dollars of residential investment property. I have been through both boom and bust cycles, made almost all the mistakes in the book myself, learned through doing, and came out much stronger and wiser as a result. I took my real life knowledge “from the trenches” (that most real estate books, courses and gurus won’t teach you) and, together with my business partners, used it to formulate “The Maverick Approach” to real estate investing…designed to help you navigate the traps and pitfalls so you can win in the real estate game.

In 2007 I co-founded Maverick Investor Group, which was named one of the Top 50 Real Estate Opinion Makers and Market Leaders by Personal Real Estate Investor Magazine--the leading U.S. magazine for individual real estate investors. Maverick has presented at real estate conferences around the world, been featured on ABC, NBC, CBS, FOX, TheStreet.com, Real Estate Wealth Magazine and a number of other publications. My business partners and I have helped individual real Maverick Investor Group Named estate investors like you (not "Top 50 Real Estate Investment Funds or Institutions) buy over Opinion Makers & Market Leaders" $100 million in residential by Personal Real Estate Investor investment property across 15 Magazine. states, which has enabled many of our clients to take control of their financial future and take their lifestyle design to a whole new level.

As we move through this next great expansion cycle, there are different “ Maverick Investor Group has pioneered players in the space, different market a business model that helps individual movers, and new factors that savvy investors from around the U.S. and investors need to understand. This around the world buy quality turn-key report is your guide for navigating the real estate in the best real estate new real estate economy and markets. ” understanding the unique aspects of this particular expansion cycle. Andrew Waite, Founding Publisher Personal Real Estate Investor Magazine So, come along for the ride and I will show you how to avoid the 7 biggest mistakes that real estate investors are making in today’s market so you can be better positioned to make the right real estate investment decisions that can fundamentally change your financial future over the next 2 to 5 years.

Remember, as with all investing there is never a ‘guarantee’ in real estate (and if anybody tells you there is, you should run in the other direction) but there are people who consistently win in the real estate game, and there are very specific (and not very complicated) reasons for that, which I will unveil in this report and show you how to apply. Let’s begin...

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Mistake #1

Confusing “property flipping” with “real estate investing”

Back when I lived in Los Angeles full time, I was sitting on my rooftop pool deck (which our LA-based clients endearingly referred to as “the Maverick office” because this was where nearly all of my in-person client meetings were held) and i got a call from a producer at a major TV network. She told me they were in the early stages of designing their next reality TV show, and “ A year and a half ago, I was a brand they wanted to make something akin to new investor, and now I have my 5th ABC’s SharkTank (where aspiring property under contract through entrepreneurs pitch potential investors) but Maverick. Everything I’ve learned from for real estate investing. She had heard Maverick in the past 18 months has been about Maverick Investor Group and was priceless. I consider Maverick to be an wondering if we wanted to be involved, so I essential asset in my real estate wealth told her it sounded interesting and asked building and I can’t imagine going her to tell me more. forward without them.”

As she continued speaking, it became clear that she didn’t want to make a show Ali Boone, about real estate investing....she wanted to Aeronautical Engineer make (Yet Another!) show about flipping Los Angeles, CA properties. She wanted to take a film crew around with a couple individuals who would muck through distressed properties, do the acquisition, renovation, and then attempt to re-sell them.

I explained to her that real estate investors (like the investors on the SharkTank panel she was attempting to emulate) do not spend their time mucking through distressed properties and renovating them. There are a number of reasons for this. To begin with, real estate investors do not “flip” properties because flipping negates almost all the unique benefits of residential investment property.

These are the primary advantages for real estate investors that are buying and holding residential investment property:

 Owning Hard Assets. Deeded, freehold residential investment property is a “ Maverick has been really great in helping hard asset that you my clients make more money and keep completely own and control more money. They understand what it takes yourself. Serious investors to find really good investment properties. build a portfolio of cash flowing Every one of my clients that has bought a rental properties and keep a property through Maverick has come back substantial portion of their and bought additional properties. Even our wealth invested there. staff CPAs are buying through Maverick.“

Flipping means you are Diane Kennedy, CPA continually getting rid of these Best-Selling Author of Real Estate assets instead of building a Loopholes and Loopholes of the Rich portfolio of them.

 Tax Advantages. Residential investment property is the most tax- advantaged asset class in Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

the U.S. As long as you are buying to hold, the U.S. government allows you to “depreciate” your rental property (the structure, not the land) over 27.5 years and take that as a “loss” on your tax return, even if the property has gone up in value (in addition to a number of other tax benefits).

Flipping properties negates just about all of these tax benefits and may also throw you into the “real estate dealer” category, which can be especially dis- advantageous for tax purposes.

 Passive Residual

Income. Performing “ The beauty of Maverick is that they go rental properties (provided out into the best markets around the you buy them right) country and find investment properties produce passive residual that perform. The properties come with income (“PRI”). Also tenants and property management in called “positive cash flow”, place already so the heavy lifting is done this is your gross rental for you.” income minus all of your fixed expenses (taxes, Jon Swire, Keller Williams

insurance, property Top 25 Agents in the U.S. for Five management fee, HOA if Consecutive Years; Author of There's No any, mortgage payment, Free Lunch in Real Estate etc.), minus an estimate for vacancy and maintenance. It is “passive” because you don’t have to actively work for it, and it is “residual” because it flows to you every month.

Building a base of hard assets that generate PRI is what smart real estate investors do. Producing enough PRI to cover your living expenses so that you don’t need to work for active income enables you to recapture your time and design your lifestyle as you choose.

On the opposite end of the spectrum, flipping properties is “work” that (in a best case scenario) produces “active” income, which builds nothing and ends the minute you stop working, just like any other job. Whether you are working for yourself or someone else, it is still a job.

 Hedge Against

Inflation. When you own “ Maverick has built its business on residential investment sound economic and financial principles, property you have one of and it has access to deals individual the only assets that investors would never be able to get provides a built-in hedge close to because it is bargaining with against inflation. Home collective buying power.” prices rise with inflation, as do rents (which you have the

ability to raise each year Rob Cass, Publisher when you sign a new lease Local Real Estate Deals Magazine with your tenants). Buying and holding residential investment property is one of the most effective ways to defend your wealth against inflation.

Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

Needless to say, flipping properties obviously provides no such protection against inflation.

Still on the phone with the TV producer, I concluded for her in summary that real estate investors make decisions and cash checks. They want passive residual income, financial independence and the ability to recapture their time and design their lifestyle to maximize their freedom. Flipping properties simply doesn’t provide a path for that.

She agreed that it sounded far more compelling to be a real estate investor than a flipper. But...she said that she still needed to make a show about flipping because it was more interesting to a TV audience and, after all, her network is in the business of getting TV ratings.

And so....the property flipping shows “ I was looking to buy a strong cash flow continue! property and you found a great value proposition for me. The best thing about Which explains why the confusion working with Maverick was the personal continues, particularly amongst newer attention I received. The whole investors trying to get in the real estate experience was tailored to my specific game. needs as an investor. You listened to my needs and responded well. The I have chosen to start the 7 mistakes customer service was excellent." with this one, because this mistake is not just expensive, but it can often turn Bruce Warner, CPA people off from real estate...for life. Garden City, UT

Even if you were ok with all the disadvantages outlined above, and you decided you still wanted to muck through distressed properties and work hard to make active income without any

of the benefits of holding investment property....Remember that what I have outlined above in my description of flipping is an absolute best case scenario.

Keep in mind that property flipping comes with an incredibly high degree of downside risk and rarely produces this best case scenario, especially for individuals who are relatively new at it. For example, when you buy properties at foreclosure auctions, you often cannot even get inside the property to inspect it until after you have purchased it. This means there is an unknown level of repairs that could be substantially higher than you estimated. It could also take you much longer to complete them, and much longer to rent or sell than you anticipated, increasing your holding costs. These variables can quickly eviscerate your profit margin...or make it negative.

By contrast, when you buy properties through Maverick Investor Group, the properties are either new or completely renovated, and you “ Maverick is the first real estate can conduct an independent 3rd party home company I’ve worked with that really inspection as part of your due diligence to understands small investors. All my verify everything was done properly. There questions were answered completely are also local property management services and their customer service was available to lease and manage your property, excellent.” so you don’t have to be a landlord. Jason Crew, CEO And the final (and perhaps most formidable) Houston, TX challenge to flipping properties is simply the amount of competition. There are multi-million dollars companies that do this professionally, at scale, in most major cities. How, exactly, are you as an individual property flipper going to compete with the resources of those entities? Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

Apparently there is a big ‘consumer’ market for the property flipping TV shows. Apparently, there is also a big consumer market for info-products hawked by self-styled real estate gurus about how to get rich quick flipping properties. If you are someone who finds those things alluring, I would encourage you to think hard about whether it is a sound financial decision for you to put your time and money into a property flipping endeavor. Based on the amount of investor-failures I have seen so far this year alone, for most people it is not.

On the other hand, if you are interested in real estate investing, either because you are a newbie looking to get into the game or because you are a seasoned investor looking to expand your existing portfolio, I would like to make you a special offer:

I would like to offer you a free 30 minute phone consultation where we can get to know you, understand your financial goals and real estate investing preferences, and then answer any questions you may have and strategize about how Maverick can support you in meeting your personal real estate investing goals.

Schedule your free consult with us, custom tailored to your personal needs and goals here: www.maverickinvestorgroup.com/phoneconsult

Mistake #2

Buying real-estate-backed securities instead of deeded, freehold real property

This is similar to Mistake #1 but the special interest groups trying to steer you in this direction are different.

Whereas Reality TV shows, infomercial gurus, and local real estate investment clubs (whose primary business model is to help real estate gurus hawk their info-products to would-be real estate investors) are the primary culprits trying to convince you that “ Working with Maverick is different “flipping properties” is the way to riches... than working with other real estate companies because I don't feel Financial advisors/planners and the mega- pressured. financial-institutions where they work are You guys are easy to work with and behind the big money advertising campaigns your customer service is excellent. I to convince you that you should surrender would definitely buy real estate from your money entirely to them (under the guise Maverick again because I trust you of “retirement planning” or “building a nest guys and trust is a big deal.” egg” or whatever the marketing term of the month is) and allow them to invest it into Sarah Luu, Real Estate Broker paper assets on your behalf, and that this is Sunnyvale, CA the “responsible” way to go.

Like the infomercial gurus, these financial planners are also trying to convince you to give them your money, but these folks use more of a “long-term responsible Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

investing” discourse as opposed to the “get-rich-quick-so-you-can-buy-flashy-cars-like- me” discourse of the infomercial gurus.

It is important to distinguish between the two though, because they target different groups of people.

If you hear language about getting rich and about being able to buy real estate with no money and no credit, guess who that is targeting? Obviously people who are not rich and who have no money and no credit. The “nest egg” discourse of “give us all your money if you want to call yourself a responsible human being who plans for retirement” is targeted more towards people who actually have money to invest.

And while your financial planner may offer you the opportunity to invest in a Real Estate Investment Trust (REIT), or buy stock in publicly traded home building companies “ I would definitely buy real estate as a way of “taking advantage of the real from Maverick again. They thoroughly estate boom”, remember these are research their offerings...only securitized paper assets that do not selecting a property or project that fits provide any of the benefits of owning residential investment property their rigid criteria for investment. Plus discussed in Section 1 above. they follow up and are extremely responsive.”

Q: Do you want to know why 99% of Richard Hall, Real Estate Broker financial advisors are not going to Austin, TX recommend that you buy deeded, freehold investment property?

A: Because (s)he doesn’t make a commission on it (and it reduces the amount of your money they will have under management). Mistake #3

Buying Commercial Real Estate instead of Residential Investment Property

Now that we have established the importance of buying “ Most property providers are transactional deeded, freehold investment sales companies that operate in one market property that you own and and try to convince people to buy in their control (and now that you market at all times, but the reality is that the understand who is trying to best real estate markets change over time. deter you from doing so and Maverick was able to completely turn this why), the next question is: around and develop a model that puts the investor first instead of the market or the What kind of investment property. Maverick starts by understanding property should you buy? the personal financial goals of each client and then helps them develop a real estate People with a substantial net investing strategy that enables them to worth are often confused about diversify across markets as they build their whether to buy residential or portfolio over time." commercial real estate. And while I have absolutely nothing Robert Rakowski, Associate Publisher against commercial real estate Personal Real Estate Investor Magazine in principle, during this current boom cycle....there is a big difference. Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

Historically, well capitalized investors who could afford it, would often choose to invest in commercial real estate, figuring the capitalization rate (and overall return on investment) should be better if you are putting more money into a larger asset that should be more scalable and less cumbersome to manage. Hence the more efficient thing to do, according to the historical assumption, would be to buy an apartment building or an office or retail complex instead of a bunch of single-family homes.

Not So Today! And this is a mistake you definitely want to avoid.

Starting in 2007, we witnessed a cataclysmic real estate market crash which, when all was said and done, resulted in a dramatic “over-correction” of the residential property market. What emerged out of that over-correction (sometimes called a “market inefficiency”) was an extraordinary value proposition enabling individual real estate investors like you to purchase fully-renovated single family homes for less than the builder replacement cost. At the same time, rental demand began increasing as more and more homeowners were displaced through the foreclosure process and thrust into the rental market. Now, overlay those general trends with select markets that were experiencing both job growth and population growth, and you had a perfect storm that provides the potential for residential real estate investors to win big…if you knew where to buy.

For the first time ever, Wall Street and some of the largest private equity funds who typically buy either no real estate or exclusively commercial real estate, decided to jump into the single family rental property space and start buying up homes because the opportunity was just so much better than other asset classes (including distinct advantages over commercial real estate).

Over a decade since the initial housing crash, the foreclosure crisis has stabilized, most of the large insitutional players have gotten out of the market, and home prices have been recovering year over year….but price-to-rent ratios for residential investment

properites are still uniquely advantageous in many markets, and long-term trends still favor investors in very important ways.

In addition to understanding the comparative value proposition that makes residential investment property more advantageous than buying commercial property right now in terms of home price trends....it is also imperative to understand how much more compelling the rental demand is for residential property and what the long-term rental trends look like as well.

U.S. Census Bureau Reports Number of U.S. Renters is Increasing

The U.S. Census Bureau reported that home “ The best thing about Maverick is ownership has dropped to 65%. That means that you guys are creative thinkers that the percentage of people renting their and problem solvers - always willing homes rose to 35%, the highest percentage to go the extra mile to make the of renters since the mid-1990s. This is very deal work. You guys are always significant for owners of rental properties available. You walked me through a because it means the demand for your asset lot of the basic stuff. I really (rental property) is increasing. In fact, this appreciated it and am looking same report from the US Census Bureau forward to the next deal.” reports that the vacancy rate for rental properties across the US is the lowest it has Farlan Dowell, Sales Manager been in over a decade and continuing to trend San Francisco, CA downward.1

To really understand rental demand, including likely future trends, it is important to dig a little Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

deeper and get to the economic drivers that are contributing to these statistics.

Former Homeowners Want to Live in a Single Family Home, Not an Apartment

One of the effects of the foreclosure crisis is that it displaced a huge number of American families who have steady, good paying jobs. They have entered the rental market and have to remain there for quite some time. They cannot buy another home because their credit took a major hit and they still cannot get a bank loan anytime soon, so they need to rent. Because they used to be homeowners, they want to live in a single family home, not an apartment. So there is a large and continually growing rental market for single family homes. This trend will likely benefit owners of single family rental properties more so than owners of apartment complexes. “ I'm a conservative real estate investor and prior to working with Maverick I Increasing Student Loan Debt had never considered investing outside Is Causing Generation Y to of my local area. But Maverick helped Remain Renters Until Much me buy out-of-state properties that had a better net return and better capital Later in Life appreciation potential. What I like best about Maverick is their follow through Looking forward at the next generation of and their immediate response to my potential homebuyers who did not get questions. I have closed on 3 Maverick tripped up in the last housing downturn, properties in the last 5 months and I there are additional factors keeping them am now working with them to buy my as renters until much later in their lives next one." than the previous generation. In general they are putting off marriage and Paul Keele, Electrical Contractor family formation until later, but one Reno, Nevada crucial economic factor is the exorbitant

amount of college debt today’s students are incurring as tuition rates continue to skyrocket. Hundreds of thousands of dollars in non-dischargeable debt that cannot go away even with a bankruptcy is keeping Generation Y as renters for much longer than prior generations.

Reuters recently reported that “More than 40 percent of 25-year-olds now have student debt, and 35 percent of twentysomethings are more than 90 days delinquent on loans that are being repaid.”2 By contrast, ABC noted that under 25% of Baby Boomers had college loan debt. And not only do more students have debt today but the amount of debt is getting much larger as tuition rates skyrocket.3 A bi-partisan poll reported that

4 73% of today’s young adults say they owe more in student debt than they can manage.

So, whether it is because they cannot afford a down payment, or because they cannot get a mortgage due to delinquent student loan payments, these economic factors are increasing the number of renters in the U.S. and shaping trends for years to come.

If the U.S. is able to get the student loan situation under control and Gen Y starts increasing their home-buying power, great, you will have more demand by people who want to buy your property when you are ready to exit. If the student loan problem continues and more people are driven to remain renters, you will be providing a valuable service by offering a quality rental property to help meet the increased rental demand.

In any case, residential investment property is what provides the greatest value to today’s renters and what is currently providing the greatest returns to real estate investors.

Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

Portfolio Diversification

By purchasing multiple single-family homes instead of one apartment complex (or other commercial building--office, retail, industrial, etc.), you are able to diversify geographically. It allows you to build a diversified portfolio of cash flowing residential investment properties over time and across markets, which also helps to mitigate your downside risk in the event that one property or market does not perform as well as you projected.

Retail Exit Strategy

Commercial properties--such as apartment complexes--are owned exclusively by investors. That means that when you are ready to sell, you need to sell to another investor who, like you, will be looking to get a great deal and want a discount on the property.

Single family homes, however, are also in demand by primary homeowners that want to live in them. And those are “retail buyers.” “The property I bought through By selling your property to an owner- Maverick is one of my greatest occupant, you have more upside potential cash flow properties, it performs between what you bought it for and what even better than I expected. Plus you are able to sell it for on the retail Maverick is very easy to work market when you are ready to exit. with and has excellent customer service so I would definitely buy Segmented Liquidation Strategy real estate from them again.”

Dr. Brad Baver Finally, when you have a large piece of Real Estate Investor commercial real estate, you only have two Fort Mohave, AZ choices: Sell or Continue to Hold. If you

have a portfolio of residential investment property made up of numerous single family homes across many markets, then you can engage in a “segmented liquidation strategy”, meaning you can sell some properties while continuing to hold others, either because you need the money or because it is the optimal point in the property cycle to do so. It gives you more flexibility and freedom to control your financial future and strategically maximize your gains.

Maverick Investor Group helps you do exactly this--we assist our clients in building a portfolio of residential investment property over time and across markets for maximum control, profit and lifestyle benefits.

The most investor-advantaged markets change over time, and Maverick studies local market trends very closely. If you would like to discuss what we feel are today’s most investor-advantaged markets, and how you can own turnkey rental property in them (new or fully-renovated properties with local property management services in place to lease and manage the properties) regardless of where you live, I would like to offer you an introductory phone consultation customized specifically for you:

I would like to offer you a free 30 minute phone consultation where we can get to know you, understand your financial goals and real estate investing preferences, and then strategize with you about how Maverick can support you in meeting your personal real estate investing goals.

To schedule this free consult with us, custom tailored to your personal needs and goals, just Register Here: www.maverickinvestorgroup.com/phoneconsult Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

Mistake #4

Sitting on the Sidelines and Hesitating to Buy Property

Given the historical moment that the real estate market is currently in, this mistake could be the most expensive one you ever make. Let’s take a brief look back over the past few years to see how this mistake has impacted people...

In 2010, we helped many of our Maverick clients buy turnkey property the Phoenix, Arizona market and they did fantastic. That was the time to buy. Those who didn’t buy missed out.

Colony, Blackstone, Waypoint Real Estate Group LLC and American Homes 4

Rent have converged on Atlanta in search of low-priced properties to buy and

rent out, after helping drive prices up 34 percent in Phoenix from a year ago.

We started getting our clients into Atlanta, GA well before the big funds even arrived (over a year before the article above was published). Since early 2011 Maverick

clients were buying in Atlanta. Once the funds got there, things just went through the roof....and our clients who bought have been sitting back and riding the wave.

The S&P Case-Shiller home price data for April 2013 showed that Atlanta home prices were up 20.8% from a year earlier, marking the largest annual increase in Atlanta home prices since the Case-Shiller Index began tracking it in 1992!5

Home prices are going up fast and you too can buy in the path of growth and benefit from this momentum. But things are moving fast, so there is no more time to be sitting on the sidelines.....or you will miss the whole boom cycle. In the 4th quarter of 2012, Maverick started helping our clients start buying in the Chicago market. Here is the home price appreciation graph for the year after our clients got in the market. The Green Circle is when our clients entered the market:

According to the S&P Case-Shiller Home Price Index, Chicago home prices increased 10.3% in the 3-month period of May-June-July 2013 alone.7 That was the fastest home price increase of any market in the country tracked by the index during that time period. We have many clients who bought multiple Chicago properties in 2013 through Maverick and absolutely crushed it.

Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

In 2014 we helped our clients get into the Dallas-Forth-Worth market in Texas. At the time DFW lead the country in both job growth and population growth for large metro areas and, in addition to massive rental demand, DFW home prices jumped 10% in a year and continued to rise through 2015.

In 2015 we helped our clients start buying in Philadelphia, PA, and in 2016 the Philly 8 market saw an 11.6% rise in home prices in a single year. Philly saw an additional 12.7% increase in 2017 (more than twice what the other top 10 largest U.S. cities averaged), and in Q1 of 2018, Philly saw the highest number of home sales the city has seen in any Q1 since 2007!

There is still substantial upside potential in many markets, especially cities like Baltimore where I personally just bought a property for my own portfolio in 2018 (as have many of our clients) because home prices in that market are rising but still well below their pre-recession peak, yet rents are high, so it has some of the best cash flow margins in the country. The lesson in all this is that you need to know which market to buy in, and what point in the property cycle to buy.

Many of the most advantageous real estate markets over the last decade are no longer the most advantageous markets to continue buying in today because prices have gone up faster than rents and there has been a process of “yield compression”. If you bought at the right time and locked in your price-to-rent ratio, you are golden. But continuing to buy as prices rise without proportional increase in rents means your returns are being diminished, and it will soon become less advantageous to keep buying there and more advantageous to buy in another market. This is exactly what Maverick helps our clients do....but in order to take advantage of the opportunity you need to get off the sidelines and get in the game.

Mistake #5

Speculating

When I started investing in real estate in the 2004 boom cycle, it looked a lot like today. Home prices were shooting up, and it felt like you couldn’t lose no matter what you bought. As a brand new investor, I didn’t have a company like Maverick to guide me, so I read a bunch of books, listened to some self-styled “experts” and assumed that as long as I bought in what appeared to be a growing market, not much else really mattered since I would surely profit off capital gains at the end of the day even if the cash flow was negative...

Let’s just say that when the boom cycle ended, that theory didn’t pan out so well.

Some call it “speculating”, some call it “gambling”, but no matter what you call it...

Don’t Do It! Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

This is where I learned my biggest, hardest and most expensive real estate investing lessons. The most expensive lessons always seem to be the ones that make the biggest impact, don’t they?

What I learned from my own mistakes and how to avoid them in the future would ultimately inform The Maverick Approach— the framework for how Maverick Investor Group now helps our clients approach real estate investing based on “real estate fundamentals”. The Maverick Approach

Buying Rental Properties Based on Real Estate Fundamentals

Buying real estate in an appreciating market is great...

If And Only If

That market ALSO has sound real estate fundamentals.

At Maverick we help our clients determine not only what markets are going up in value (and where they are in the property cycle), but we also look at:

 The price-to-rent ratio (how low you can buy the property for and how high you can rent it). Hence, how good is the potential cash flow margin?

 Demand drivers like job growth, population growth and percentage of the population that rents.

 Supply side indicators - how much property is available for sale and for rent in a particular price point? How long does it stay on the market? What is the absorption rate?

 Affordability - What percentage of the population can actually “afford” the median home price based on the median income (and how much more can the properties appreciate before the majority of the population can no longer afford them)?

 Expenses. How much do property tax rates, HOA fees and other localized expenses (which vary by market and location) affect your overall cash flow and your “capitalization rate”?

 Micro Market Factors - What is the ratio of primary home owners to renters in the community? What are the market rents, the localized vacancy rates and how are those trending in the local areas?

Whereas it certainly makes sense to “buy in the path of growth” in many instances, be advised that many investors are buying in certain markets that we consider highly Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

speculative. Regardless of the home price appreciation trends in these markets, we absolutely do NOT recommend our clients buy in markets do NOT have the sound real estate fundamentals that are the entire foundation of The Maverick Approach. Be sure you know which markets are which.

Learning how to get access to this type of market data is a core component of the value we provide to our clients so you can make highly informed decisions when you are ready to buy your investment property. Mistake #6

Failing to Conduct Proper Due Diligence

Many people get burned because they don’t conduct the proper due diligence on their properties before they close.

The first step in due diligence should be all of the market analysis (both macro and micro) listed above in the previous section (verifying rental rates, vacancy rates, trends, etc.), to ensure you are buying in an “investor advantaged” location. We provide our clients tools and access to relevant data so they can do all this independently.

Once you have established that, you need to go deeper and investigate the actual property itself. As the buyer, you are always responsible for doing your own due diligence. Nobody can do it for you and if anyone tells you they can, run in the other direction. The responsibility is on you to establish a thorough, uniform due diligence regiment that should include these items as a bare minimum:

 A third party home inspection by a professional home inspector. Ensure you are the one who hires the home inspector (and don’t simply accept an inspection that was already done and paid for by the seller). When the home

inspector is hired by you, they work for you, and their job is to help you identify “Maverick has been very nice any defects in the property that need to be to work with. They have been cured before you close (or if there are professional from start to serious problems, to let you know about finish and we never had any them so you can decide not to buy that sales pressure. Their property). customer service was tailored to our specific needs and we  Independently verifying all of your felt very comfortable through expenses associated with the property the whole process.” (property taxes, insurance rates, HOA Dr. Chris Latvis dues if any, mortgage payment if any, Dentist etc.). Under-estimating or omitting some of Avon, CT these can skew your cash flow analysis.

 Reviewing the purchase contract as well as the property management agreement (you have a right to get your lawyer to review it as well). Ensure that you get all your questions answered and that you understand everything before signing.

 If there is a Home Owners Association (HOA), you should confirm it is solvent. Otherwise, your property value could decline based on other residents not paying their HOA dues. You also need to understand the CC&Rs and confirm there are no restrictions on renting your property (I have heard about investors buying property in communities where the HOA did not allow rentals…Now that would suck. Confirm before you close!)

Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

Mistake #7

Not Doing the Proper Tax Planning

Residential investment property is the most tax-advantaged asset class in the U.S. The government has devised a number of major financial incentives to encourage you to buy and hold rental property. You simply need to know what they are and understand how to take them. If you are not taking advantage of these tax incentives, you are losing out on one of the most lucrative aspects of this asset class.

Now, I need to make the important disclaimer that I am not a lawyer or tax professional, this is not tax advice, tax laws change regularly, and you need to consult your own tax professional about your individual situation and the most updated applicable law. Got it? Ok.

With that said, I can tell you that many of our clients have been able to use their investment real estate as an incredibly strategic vehicle for dramatically reducing their taxes. As mentioned in the first section of this report, residential investment property is depreciable for tax purposes even if it is appreciating in value. You need to remove the value of the land and then you can depreciate the structure of your

property over 27.5 years. That means if the structure is worth $275,000, you can depreciate $10,000 per year, and take that as a “phantom loss”. You can then use that “loss” to offset some or all of the taxes that would be owed on the rental income generated by the property, for example. There are a number of other potential write- offs, as well as ways to accelerate deprecation on certain parts of your property. You just need to know what they are and how to take them, legally.

A number of our clients have also been able to qualify for the coveted “real estate professional” status, which allows your left over real estate “losses” to be taken against other forms of income (including earned income from your job or your spouses job that has nothing to do with the property), regardless of how much money you make. IRS guidelines for this qualification are tightening so be sure to consult with a tax professional to ensure it is done properly.

The possibility of using residential investment property to dramatically change your tax situation is profound. But, you have to ensure you are doing it correctly and legally. And, as a word of caution here, if you are serious about this you do not want to rely exclusively on regular accountants who deal primarily with W2 wage earners. You want to seek out experienced CPAs who specialize in dealing with professional real estate investors and business owners and are experts in this niche.

Maverick has good relationships with some of the nation’s premiere CPAs that specialize in working with real estate investors and our clients get exclusive access and personal introductions. The same is true with asset protection specialists, mortgage lenders, insurance providers, and other industry experts that can help you with various aspects of your real estate investing. We have developed an elite network of the nation’s premiere experts and being a part of the Maverick community gets you personal access at no charge. Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

If you would like to schedule a phone consult discuss your real estate investing goals, as well as any expert-introductions you may need, and to get your questions answered, I’d like to offer you completely free phone consultation. You have made it to the end of this report, so you are obviously serious and diligent. We always appreciate that about our clients and would love to get to know you better and see how we could provide value to you. You can just click on the link below to register for the completely free consult so you can get to know us and see if it would be a good fit for us to work together. We look forward to speaking with you!

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Special Offer For You:

I would like to offer you a free 30 minute phone consultation where we can get to know you, understand your financial goals and real estate investing preferences, answer all your questions and strategize about how Maverick can support you in meeting your personal real estate investing goals.

Register Here: www.maverickinvestorgroup.com/phoneconsult Get to know us. Strategize with us about how we can help you meet your real estate investing goals. Register for a complimentary phone consultation: www.MaverickInvestorGroup.com/phoneconsult

Footnotes:

1. http://www.census.gov/housing/hvs/files/currenthvspress.pdf 2. http://blogs.reuters.com/great-debate/2013/03/07/student-loan-bubble-babble/ 3. http://abcnews.go.com/Business/student-loan- debt/story?id=19150985#.Uaf6ppXr46g 4. http://www.ticas.org/files/pub/2011_Young_Adult_Higher_Ed_Poll_NR.pdf 5. https://www.spice-indices.com/idpfiles/spice- assets/resources/public/documents/12473_cshomeprice-release-0625.pdf 6. http://www.bloomberg.com/news/2013-05-29/carrington-stops-buying-u-s-rentals- as-blackstone-adding.html 7. http://us.spindices.com/indices/real-estate/sp-case-shiller-il-chicago-home-price- index 8. http://drexel.edu/lindyinstitute/projects-reports/reports/

About Maverick Investor Group:

Maverick Investor Group was founded by real estate investors for real estate investors. It is run by investment property specialists that serve real estate investors exclusively.

Vision

To radically improve peoples' lives through real estate.

Mission

To build a socially responsible community that uses real estate as a vehicle for designing extraordinary lifestyles, living their dreams in the present and affecting positive change in the world.

Maverick Investor Group, LLC [email protected] 725-222-0488

9890 S. Maryland Pkwy. Suite #200-A Las Vegas, NV 89183