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March 25, 2008

Let People Know About What You Do: A Review of The Complete Idiot’s Guide® to Guerrilla Marketing

Book Review

Letting People Know About What You Do

The Complete Idiot’s Guide® to Guerrilla Marketing: Get creative … and get the word out about your product or service, Susan Drake and Colleen Wells, (Alpha, 2008, $18.95)

Whatever your business, if people don’t know about what you do, you’re not likely to be very successful. That’s why marketing is essential, no matter what business you’re in—and especially for real estate investors. People need to know that you’re the go-to person when they need a property or have one to sell, and they only way they can know is if you’re telling them.

With The Complete Idiot’s Guide to Guerilla Marketing, Susan Drake and Colleen Wells have written a classic Idiot’s Guide—easy to read, entertaining, informative, and best of all, useful.

The authors begin by explaining that guerilla marketing is a phrase coined by Jay Conrad Levinson in his 1984 book, Guerrilla Marketing, to describe unconventional and inexpensive marketing methods geared toward small businesses. In the more than two decades since, the term has come to mean unconventional marketing methods of all types and sizes.

After a solid explanation of the basics—what is marketing and why is it necessary—the authors explain some traditional marketing techniques. You may be tempted to skip these chapters, but don’t. They provide the foundation for the rest of the book, which covers marketing in today’s fast-paced, internet-based, digital world populated by people who, when all is said and done, really just want their needs met.

Throughout the book, Drake and Wells explain strategies, offer real life examples of how large and small companies have actually used them, and develop some hypothetical situations illustrating how the reader might apply the same techniques. You can use their creative process to figure out how these same techniques can be applied to a real estate investing operation.

Perhaps the most interesting and valuable section of this book is Part 3, “To the Internet and Beyond!” Drake and Wells explain podcasts, blogs, Bluetooth messaging, social networking, message boards, search engine optimization, and more. They close with some practical how-to tips and questions that will guide you to figuring out what strategies will best work for your particular goals.

You’ll also learn some behind-the-scenes facts about marketing and publicity stunts that will make for great cocktail party chitchat. For example, did you know that there’s a restaurant in Lodi, California that offers a 50 percent discount to bald people on Wednesdays?

If you’re smart enough to be in real estate investing, you’re certainly not a “complete idiot”—but you’ll find plenty in The Complete Idiot’s Guide to Guerilla Marketing to make it a worthwhile read.

Reviewed by Jacquelyn Lynn, author of The Entrepreneur’s Almanac.

Profits through Probate

Profits through Probate

By Jordan Taylor

Probate is a real estate investor’s dream come true: It’s a steady market that is constantly being replenished with an abundance of properties owned by motivated sellers.

What is probate? It’s a legal process that takes place after someone dies that transfers ownership of the decedent’s property to his or her heirs. While probate specifics vary by state, the general process includes proving in court that the deceased’s will is valid, identifying and inventorying the deceased’s property, having that property appraised, paying debts and taxes, and then distributing the remaining property as the will stipulates. If there is no will, the disposition of the estate is determined by state law.

More than 73 million people in the United States currently own their homes. Most of those people will still own those homes, and possibly other real estate, when they die, and that property becomes part of an estate that must be transferred to an heir or heirs. Probate investors can expedite this process by liquidating the property quickly to make it easier for the estate to be settled.

There is a common misperception that properties in probate can’t be sold until the estate is settled. This is not true. In fact, if the property is sold while the estate is in probate, it can speed up the settlement process.

While plenty of people are delighted to inherit Grandma’s house or Uncle Joe’s hunting cabin, millions of others see these properties as a burden they don’t have time to deal with. Many probate properties are distressed, often because the owners were elderly and unable to properly care for their homes. In many cases, the heirs are scattered in other cities and states, making it difficult for them to deal with the details involved in disposing of the probate property. Also, heirs often don’t want to—or can’t—interrupt their own lives to handle selling a property, and they may not have the cash necessary to get it in marketable condition, or even to make mortgage and insurance payments. They may have strong feelings about the property—sometimes positive, sometimes negative—that could be pushing them to a fast resolution. Typically they just want to get the estate settled as fast as possible, and if that means selling property for under market value, they’ll often do it.

Finding Probate Deals

There are a number of ways to locate probate opportunities. One is to read the legal notices in your local newspaper. Most communities have a legal record newspaper that publishes legal notices. You can also read the death notices and obituaries in the local newspaper; in most areas, these are available online as well as in print. Search the tax records to see if the deceased owned any real property, and if so, make contact with the executor or personal administrator of the estate.

Market to probate and family law attorneys. Send them direct mail, attend the networking events they attend, call their offices and set up meetings to introduce yourself. Network with your own family, friends, and acquaintances, as well as the community at large. Let everyone know that you are a probate property problem-solver and the go-to person if someone needs to dispose of a probate property.

A method that takes more work but is generally more productive is to research court records, either at the courthouse or online (if your local court systems posts this information online). The court records will tell you everything you need to know about the estate, whether or not it includes real property, and who you need to contact with your marketing message.

Remember that probate marketing can be delicate. The family may be grieving or there may be other dynamics going on that will affect how the heirs respond to you. Acknowledge their loss and make it clear that you are there to help.

When it comes to negotiating the deal, the actual process is much like any other real estate transaction. Explain that you are a real estate investor who helps people with probate properties, get the details on the property, do the math and make your offer.

Of course, as with any real estate investment, you should always go into the deal with a clear exit strategy in mind. Never buy a property—probate or otherwise—without knowing what you’re going to do with it. Remember that the abundance of opportunities available through probate investing do not relieve you of the necessity to follow solid investing practices from beginning to end of every transaction.

Preparing for an IRS Audit

Tax Issues:

Preparing for an IRS Audit

The IRS has questions about your tax return—what do you do now?

By Jacquelyn Lynn

Last year, nearly 1.4 million individual tax returns were audited by the Internal Revenue Service (IRS), an increase of 7 percent over 2006. Audits of businesses in general increased almost 14 percent in 2007, although audits of S Corporations were up 26 percent and audits of partnerships rose almost 25 percent. The IRS calls this “increased enforcement,” and a key driver behind it is the government’s goal to close the tax gap, which is the difference between the amount of tax the agency determines should have been paid and the amount of tax actually collected.

What if your tax return becomes one of these statistics? First, says IRS spokesperson Anthony Burke, “Don’t panic. Look at your return and figure out what happened.” Burke notes that what most people call an audit is an “examination” in IRS-speak. “We never audit people. We examine tax returns,” he says.

Some examinations are handled entirely by mail or through a combination of mail and telephone calls. Others may take place in your home, your business, an IRS office, or the office of your attorney or accountant.

Your first notice of a mail (also known as a correspondence) audit is likely to be either a request for more information or a letter stating that the IRS is proposing changes to your return. The audit will generally address one or two specific issues, and that’s all you’ll likely need to deal with. You can respond by mail or request a personal interview. If the IRS proposes changes to your return, you have the option to accept the changes and pay whatever additional tax (if any—it’s possible you could get a refund) that results, or you can disagree and offer evidence to support your position.

The notice for an in-person examination will tell you the time and place of the examination, along with what documents you need to have available. If the time is not convenient for you, simply call the IRS and reschedule. The IRS will make every effort to work with you on this issue, says Rex D. Alves, CPA, a former IRS agent and now a consulting accountant with Lewis & Spagnol CPA, LLC, in Maitland, Florida. “They want you relaxed,” he says, adding that in-person interviews are normally conducted where the books and records are. If you have a business, expect some disruption during this process.

Whether the examination is by mail or in person, immediately advise your tax professional when you receive a notice and let him deal with the IRS, says Alves. “When you go to an IRS office, it’s their ballpark, their rules. Tax practice is driven by procedure. If you don’t know the procedure, you’re groping around in the dark. Even when the agent comes to your house or your business, it’s still their ballpark [because you have to operate by their rules].”

Your tax professional should carefully review the items on the appointment letter and checklist provided by the IRS and you should furnish him with whatever documentation is requested. If you have kept good records and can support every item on your return, the examination should be a straightforward process. If you have taken deductions you cannot prove, they may be disallowed and, if so, you could be assessed additional tax and possibly interest and penalties. Tax professionals who are experienced in dealing with the IRS are usually familiar with the agents and will consider the strengths, weaknesses, and reputation of the auditor when preparing for the examination.

Throughout the examination process, you can act on your own behalf or have someone accompany you or represent you. Alves recommends that you send your tax professional and don’t personally attend the audit meeting. It’s easy to get nervous and talk too much—and that could cost you money. “As an agent, I got some good adjustments just by letting people talk,” Avles recalls. “They told me things they probably shouldn’t.”

Remember that the first step in preparing for an IRS examination is taken long before the notice is issued: Keep good records from the start. If you can document everything that you claim, an audit should be little more than an inconvenience that probably won’t even produce good cocktail party stories. If you can’t, have a candid conversation with your tax professional to determine the best strategy—and be prepared to pay.

Most important is that you take prompt action when you receive any kind of IRS notice. “It never does you any good to put that letter on the bottom of a pile of stuff and just pretend it never happened,” says Burke.

Jacquelyn Lynn is the author of The Entrepreneur’s Almanac (Entrepreneur Press).

March 24, 2008

Has the market hit bottom?

The February numbers are out and the housing market is showing signs of stability. Sales of existing homes are rising and inventories are falling. Click to read the MarketWatch report.

March 22, 2008

Rich Dad Education Forum Starts in One Week!

The Rich Dad Education Annual Forum starts on March 30 in Orlando! There's still time to reserve your spot to see Robert and Kim Kiyosaki, plus a host of other exciting, motivating, informative speakers -- all live and in person! You will "Strike it Rich" at this phenomenal event, so click here now for more information and to find out how to register.

March 17, 2008

An Irish Blessing for St. Patrick's Day

"Here's wishing you the top o' life without a single tumble.
Here's wishing you the smiles o' life and not a single grumble.
Here's wishing you the best o' life and not a claw about it.
Here's wishing you the joy in life and not a day without it."

-- Irish Blessing

March 13, 2008

Phishing Scams, Frivolous Arguments Top the IRS' 2008 “Dirty Dozen” Tax Scams

WASHINGTON — March 13, 2008 – The Internal Revenue Service today issued its 2008 list of the 12 most egregious tax schemes and scams, highlighted by Internet phishing scams and several frivolous tax arguments.

Topping this year’s list of scams is phishing, which encompasses numerous Internet-based ploys to steal financial information from taxpayers. New to the “Dirty Dozen” this year is a scheme, which IRS auditors discovered, that relates to unreasonable and/or excessive fuel tax credit claims.

“Taxpayers should be wary of scams and promises to avoid paying taxes that seem too good to be true,” Acting IRS Commissioner Linda Stiff said. “There is no secret formula that can eliminate a person’s tax obligations. People should be wary of anyone peddling any of these scams.”

Tax schemes can lead to problems for both scam artists and taxpayers. Tax return preparers and promoters also risk significant penalties, interest and possible criminal prosecution.

The IRS urges taxpayers to avoid these common schemes:

1. Phishing

Phishing is a tactic used by Internet-based thieves to trick unsuspecting victims into revealing personal information they can then use to access the victims’ financial accounts. These criminals use the information obtained to empty the victims’ bank accounts, run up credit card charges and apply for loans or credit in the victims’ names. Phishing scams often take the form of an e-mail that appears to come from a legitimate source. Some scam e-mails falsely claim to come from the IRS. To date, taxpayers have forwarded more than 33,000 of these scam e-mails, reflecting more than 1,500 different schemes, to the IRS. The IRS never uses e-mail to contact taxpayers about their tax issues. Taxpayers who receive unsolicited e-mail that claims to be from the IRS can forward the message to a special electronic mailbox, phishing@irs.gov, using instructions contained in an article titled “How to Protect Yourself from Suspicious E-Mails or Phishing Schemes.”Remember: the only official IRS Web site is located at www.irs.gov.

2. Scams Related to the Economic Stimulus Payment

Some scam artists are trying to trick individuals into revealing personal financial information that can be used to access their financial accounts by making promises relating to the economic stimulus payment, often called a “rebate.” To obtain the payment, eligible individuals in most cases will not have to do anything more than file a 2007 federal tax return. But some criminals posing as IRS representatives are trying to trick taxpayers into revealing their personal financial information by falsely telling them they must provide information to get a payment. For instance, a potential victim is told by phone or e-mail that he or she is eligible for a rebate but must provide a bank account number (or similar information) to get the payment. If the target is unwilling, the victim is then told that he cannot receive the rebate unless the information is provided. Individuals should remember that the only way to get a stimulus payment is to file a 2007 tax return. The IRS urges taxpayers to be extra-vigilant. The IRS will not contact taxpayers by phone or e-mail about their stimulus payment.

3. Frivolous Arguments

Promoters of frivolous schemes encourage people to make unreasonable and unfounded claims to avoid paying the taxes they owe. Most recently, the IRS expanded its list of frivolous legal positions that taxpayers should stay away from. Taxpayers who file a tax return or make a submission based on one of these positions on the list are subject to a $5,000 penalty. The most recent update of the list of frivolous positions includes: misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending, erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States, a nonexistent “Mariner’s Tax Deduction” related to invalid deductions for meals and the misuse of the fuel tax credit (see below). The complete list of frivolous arguments is on the IRS Web site at IRS.gov.

4. Fuel Tax Credit Scams

The IRS is receiving claims for the fuel tax credit that are unreasonable. Some taxpayers, such as farmers who use fuel for off-highway business purposes, may be eligible for the fuel tax credit. But some individuals are claiming the tax credit for nontaxable uses of fuel when their occupation or income level makes the claim unreasonable. Fraud involving the fuel tax credit was recently added to the list of frivolous tax claims, potentially subjecting those who improperly claim the credit to a $5,000 penalty.

5. Hiding Income Offshore

Individuals continue to try to avoid paying U.S.taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans. The IRS and the tax agencies of U.S. states and possessions continue to aggressively pursue taxpayers and promoters involved in such abusive transactions.

6. Abusive Retirement Plans

The IRS continues to uncover abuses in retirement plan arrangements, including Roth Individual Retirement Arrangements (IRAs). The IRS is looking for transactions that taxpayers are using to avoid the limitations on contributions to Roth IRAs. Taxpayers should be wary of advisers who encourage them to shift appreciated assets into Roth IRAs or companies owned by their Roth IRAs at less than fair market value. In one variation of the scheme, a promoter has the taxpayer move a highly appreciated asset into a Roth IRA at cost value, which is below annual contribution limits even though the fair market value far exceeds the amount allowed.

7. Zero Wages

Filing a phony wage- or income-related information return to replace a legitimate information return has been used as an illegal method to lower the amount of taxes owed. Typically, a Form 4852 (Substitute Form W-2) or a “corrected” Form 1099 is used as a way to improperly reduce taxable income to zero. The taxpayer also may submit a statement rebutting wages and taxes reported by a payer to the IRS. Sometimes fraudsters even include an explanation on their Form 4852 that cites statutory language on the definition of wages or may include some reference to a paying company that refuses to issue a corrected Form W-2 for fear of IRS retaliation. Taxpayers should resist any temptation to participate in any of the variations of this scheme.

8. False Claims for Refund and Requests for Abatement

This scam involves a request for abatement of previously assessed tax using Form 843, “Claim for Refund and Request for Abatement.” Many individuals who try this have not previously filed tax returns. The tax they are trying to have abated has been assessed by the IRS through the Substitute for Return Program. The filer uses Form 843 to list reasons for the request. Often, one of the reasons given is "Failed to properly compute and/or calculate Section 83-Property Transferred in Connection with Performance of Service."

9. Return Preparer Fraud

Dishonest tax return preparers can cause many problems for taxpayers who fall victim to their schemes. These scam artists make their money by skimming a portion of their clients’ refunds and charging inflated fees for return preparation services. They attract new clients by promising large refunds. Some preparers promote the filing of fraudulent claims for refunds on items such as fuel tax credits to recover taxes paid in prior years. Taxpayers should choose carefully when hiring a tax preparer, especially one who promises something that seems too good to be true.

10. Disguised Corporate Ownership

Some people are going as far as forming domestic shell corporations in certain states for the purpose of disguising the ownership of a business or financial activity. Once formed, these anonymous entities can be used to facilitate underreporting of income, non-filing of tax returns, engaging in listed transactions, money laundering, financial crimes and even terrorist financing. The IRS is working with state authorities to identify these entities and to bring the owners of these entities into compliance.

11. Misuse of Trusts

For years, unscrupulous promoters have urged taxpayers to transfer assets into trusts. They promise reduction of income subject to tax, deductions for personal expenses and reduced estate or gift taxes. However, some trusts do not deliver the promised tax benefits. As with other arrangements, taxpayers should seek the advice of a trusted professional before entering into a trust.

12. Abuse of Charitable Organizations and Deductions

The IRS continues to observe the misuse of tax-exempt organizations. Misuse includes arrangements to improperly shield income or assets from taxation, attempts by donors to maintain control over donated assets or income from donated property and overvaluation of contributed property. In addition, IRS examiners are seeing an upturn in instances where taxpayers try to disguise private tuition payments as contributions to charitable or religious organizations.

IRS Watches Scams That Fall Off the List

While the IRS has seen a decline in the occurrence of some of these scams, other problems, such as abuse of the American Indian Employment Credit and misuse of structured entity credits, continue to be areas of concern. The absence of a particular scheme from the Dirty Dozen should not be taken as an indication that the IRS is unaware of it or not taking steps to counter it.

How to Report Suspected Tax Fraud Activity

Suspected tax fraud can be reported to the IRS using IRS Form 3949-A, Information Referral. Form 3949-A is available for download from the IRS Web site at IRS.gov. The completed form or a letter detailing the alleged fraudulent activity should be addressed to the Internal Revenue Service, Fresno, CA 93888. The mailing should include specific information about who is being reported, the activity being reported, how the activity became known, when the alleged violation took place, the amount of money involved and any other information that might be helpful in an investigation. The person filing the report is not required to self-identify, although it is helpful to do so. The identity of the person filing the report can be kept confidential.

Whistleblowers also could provide allegations of fraud to the IRS and may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623.

March 06, 2008

How do foreclosures and bankruptcies affect credit scores?

FICO (the credit scoring company) sends out a e-newsletter with interesting information. The latest one included a question about the impact foreclosure has on credit scores. If you are a foreclosure investor, you should understand this. Here’s the question and answer as published by myFICO.

Dear myFICO,
It's inevitable that I will have to let the bank foreclose on my home. I just can't afford the monthly payments and I can't refinance because my home is worth significantly less now than when I bought it. Will this foreclosure ruin my FICO score forever? Are there alternatives to foreclosure that will save my credit? Is declaring bankruptcy better for my score?
Tampa Bay, Florida

Dear Aaron,
I'm very sorry to hear about your predicament. Over the last few years we've received a lot of questions about foreclosures and their effect on your FICO® score. The Mortgage Bankers Association recently estimated that 1 out of every 200 homes in the US will be foreclosed upon - so there are many homeowners dealing with this difficult situation. I'll address each of your questions, but limit my responses to our area of expertise: FICO scores. However, you should consider doing additional research to understand all of your options prior to making decisions regarding your home.

Before addressing your specific questions, let me ask you this: did you contact your lender? If you anticipate mortgage trouble, we always recommend reaching out to your lender. Your lender may be willing to work with you to find a solution that would keep you in your home.

How will your FICO score consider a foreclosure?
There's no denying that foreclosures are considered a very negative event by your FICO score. With that said, it's a common misconception that a foreclosure will make it impossible to rebuild your credit. In fact, if you keep all of your other credit obligations in good standing, there's a good chance that your FICO score could begin to rebound in just 2 years. Try to pay your auto loans, credit cards and any other credit obligations on time to limit the effect of this foreclosure.

Are other options better for my credit standing?
Recently, several alternatives to foreclosure have become popular - some of these include "short sales" and "deeds-in-lieu of foreclosure". These may be viable options for you, and you should definitely do research to determine if these options make sense for your situation. However, as far as your FICO score in concerned, there is no difference between foreclosures and short sales or deeds-in-lieu of foreclosures. Each of these actions is considered an account that was "not paid as agreed", and will have the same impact to your FICO score.

What about bankruptcy?
While both foreclosures and bankruptcies are considered very negative items by your FICO score, a foreclosure can be isolated to a single account (your mortgage account). Often, bankruptcies involve multiple accounts that are "not paid as agreed", so bankruptcies have the opportunity to be further reaching than foreclosures. However, if you're unable to pay other credit obligations in addition to your mortgage, you may need to consider bankruptcy.

While the reality of losing your home to foreclosure is difficult, there is a real possibility that you can rebuild your credit in a relatively short amount of time. Keep in mind that a foreclosure is just one negative item on your credit file and as time passes, its impact on your FICO score will lessen. From the entire myFICO team, we hope this information has been helpful and that you find your financial footing again soon.

Learn more at www.myfico.com.

March 03, 2008

Positive Signs in the Housing Markets

Some Positive Signs Visible in the Housing Markets
Economic Stimulus Act of 2008 Signed Into Law -- Mortgage Availability Should Be Affected Positively

NEW YORK, NY--(Marketwire - March 3, 2008) - Bright spots appear within the negative outlook, according to the RPX Monthly Housing Market Report released today by Radar Logic Incorporated.
"Despite the continued flow of bad news from the housing markets, several of the cities tracked by RPX are sending positive signals," said Michael Feder, Chief Executive Officer of Radar Logic Incorporated.

Key Points of the December 2007 RPX Housing Market Report include:
-- For December 2007, of the 25 Metropolitan Statistical Areas examined, four residential markets showed price increases.

-- Transaction volumes have been a leading indicator for price declines in most cities. Boston, Cleveland, Detroit, Sacramento and San Diego are experiencing a recent increase in volume after a period of price declines.

-- The Economic Stimulus Act of 2008 is now law. Cities with higher price points may see increases in the liquidity of the residential mortgage market as a result, possibly sparking an end to the slide in housing prices.

To read the full release, click here.