Don't Put All Your Eggs in One Basket

We have all heard the expression but what does it really mean when we are talking about asset protection?

Smart business people place their “eggs” into separate “baskets” by diversifying their investments, separating portfolios, carrying the right insurance, and even making sure proper records are backed up remotely. Ships are built in the same manner; sectioning of the hull into multiple compartments so that if one section is breached it can be sealed off so the ship remains afloat.

While the principle of diversification is universally embraced in business and investing it is shocking how many people unknowingly violate this principle and leave all of their assets vulnerable to being lost with one lawsuit. Most people can have their assets traced via on simple accessible piece of data, their social security number. By failing to diversify the ownership, everything is at risk if they ever suffer a legal attack. If you set yourself up correctly, even if assets are found they can be protected legally if they are owned correctly.

This leads us to an important principle of asset protection - compartmentalization. By having various assets owned or held by different entities that are separate from you, you dramatically reduce your risk of loss in the event of a legal attack. If one asset or entity runs into trouble, i.e. a tenant in your rental property slips and falls and sues, only the assets in that particular entity are at risk. They cannot lay claim to your other assets or entities.

A WRONG and POPULAR general rule of thumb is to limit the amount of assets in any one entity to 20% of your net worth or up to $250,000. In the asset protection world this is “common knowledge.” Unfortunately it is some of the worst advice real estate investors can get! We’ll explain to you in detail why this is dangerous advice at my private event in February!

On February 29 - March 2, 2008 I'll be conducting my private seminar for 14 people on income explosion and extreme asset protection where those 14 people will leave with everything set up and in hand and the knowledge of how to use everything they learn. I guarantee this event will be unlike anything ever presented because the event is for the 14 people in attendance and built around their needs.

Now go buy a house,

Gerald Romine

PS – This private ‘Step-By-Step’ Real Estate Wealth Explosion and Asset Protection PRIVATE Seminar is limited to just 14 attendees. It will be private. It will be intense. You will be blown away by the experience. I guarantee it. Applications are time stamped and hesitating even 5 minutes could cost you this phenomenal opportunity. Take action now - www.nobsassetprotection.com.

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If you are considering protecting your assets, now is the time to complete your due-diligence and get yourself protected. By taking action now you maximize the effectiveness of your efforts and may even prevent lawsuits from occurring in the first place.

Looking for Deep Pockets

Let's say you are there is a four-car accident on the highway and you are partly responsible for causing the accident as well as two of the other drivers. One passenger in one of the cars is badly injured and sues all three of you. The court awards a $1.2 million injury judgment in favor of the passenger and assigns 1/3 of the fault to each driver.

The other two drivers carry bodily injury liability insurance with a limit of $25,000 per person and they have no assets. You carry a limit of $250,000 per person in bodily injury liability insurance and you own real estate and other valuable assets worth about $1 million.

With a little math, you figure your liability will be $400,000 since you are 1/3 at fault. The insurance company will pay the $250,000 and you'll have to come up with the remaining $150,000 to payoff the judgment. It's a lot of money no doubt but with your net worth you will survive. Your out-of-pocket expense might be just $150,000 if the suit is filed in most states but not if it's filed in say, Kansas, Massachusetts, Tennessee, or ten other states.

If you happen to be sued in one of these states, you will have to pay the entire balance since the other at-fault drivers do not have assets. It’s wrong but it is the law.

Now the three insurance companies will pay a total of $300,000. So you will be on the hook for the remaining $900,000! The reason for this wrong-justice is the common law rule called Joint and Several Liability.

JOINT AND SEVERAL LIABILITY

The theory of Joint and Several Liability allows that each defendant in a legal action is responsible for the entire amount of damages that a plaintiff is entitled, regardless of their relative degree of responsibility for the damages involved. This has come to be known as the "deep pocket rule" because it has had the effect of turning lawsuits into all out searches to find the most financially lucrative defendants. The search for deep pocket defendants has created a "lottery" atmosphere within the legal system in this country.

So if you are sued in the wrong state and you have a deep pocket, you will be the one the hungry lawyers are looking to pin some degree of fault so that they can collect the entire judgment from you.

To protect yourself from joint and several liability, you must not appear to have a deep pocket. The only way to do that is to get assets out of your name. I'm sure you've heard of the quote from John D. Rockefeller. He said: "Own nothing and control everything." There is no better application for this philosophy than to protect yourself against the risk of joint and several liability.

On February 29 - March 2, 2008 I'll be conducting my private seminar for 14 people on income explosion and extreme asset protection where those 14 people will leave with everything set up and in hand and the knowledge of how to use everything they learn. I guarantee this event will be unlike anything ever presented because the event is for the 14 people in attendance and built around their needs.

Now go buy a house,

Gerald Romine

PS – This private ‘Step-By-Step’ Real Estate Wealth Explosion and Asset Protection PRIVATE Seminar is limited to just 14 attendees. It will be private. It will be intense. You will be blown away by the experience. I guarantee it. Applications are time stamped and hesitating even 5 minutes could cost you this phenomenal opportunity. Take action now - www.nobsassetprotection.com.

The Idiot Theory - Foreclosure Laws Changing

The Idiot Theory - Idiots that make the laws will enact new bills and legislation but rarely do they fix the problems they attempt to solve.

You have to love how politicians predictably pander to the ‘crisis’ at hand. They are like a ‘2 Bit Whore’ jumping on any bandwagon that might get them votes so they can stay in office with their fat paydays for no work.

The mortgage crisis is their latest pet project. New bills are being drafted to protect tenants from foreclosure.

The problem: Landlords are collecting rent up until the foreclosure. The tenant is often unaware or being lied to by the landlord or property management. Foreclosure happens and the Sheriff comes by to throw them out. There is an easy solution for the tenants but the idiots will not figure it out.

Solution: Change the laws to require a landlord give a '30 day notice due to foreclosure' to the tenant. It’s simple and the same notice to move tenants receive in most instances anyway.

But that’s not what the legislatures are doing. They are creating new legislation that may require foreclosing lender to give the tenant up to 6 months to find a new place to rent. Absolutely insane!

I know that no matter how grim things look with new laws and legislation there is always a gold lining filled with opportunity for people if they take the time to look.

This one is just too easy. If this bill or any like it go into effect mandating the tenant has time to stay in the property after a foreclosure to find a new abode it will be a huge for investors. Legislation like this will force the foreclosing party (the lender) into becoming landlords.

This creates massive problems for lenders because it forces them into property management. Who is going to collect rents? Who is going to do the repairs? What about the security deposit? How do they get a copy of the existing lease? How does this affect their yields? How does this affect their REO and lending ratios?

The lenders will have to contract property managers which does not sound too hard until you think about how many properties and take into consideration the varying locations of those properties.

Let’s say the lender has one property in Timbuck Two. The lender has to invest the man hours to find and contract a property manager. Multiply this time 500, 1000, or 10,000 properties and you have a logistics nightmare.

To make matters worse the lenders will incur increased losses. Assume a property had a payment of $3000 per month from the owner and most of this was interest/profit payable to the lender. Assume the rent on the property is $1000 monthly. (These numbers are realistic in many parts of the country) The lender is losing $2,000 monthly or over 6 months $12,000.

Now a few of you are saying, “But Gerald, the lender is not losing $2,000 monthly because they now own the house free and clear since there is no loan. The lender is actually making $1,000 per month.”

A fair argument. However, if the lender has the ability to loan out their money and get $3,000 per month and are now forced to get $1,000 per month on the same money they are literally earning $2,000 less per month. They may not have a $2,000 loss per month but they have a $2,000 reduction in gross income per month giving them the same net effect.

Assume the lender has 1000 properties; that’s a $2,000,000 monthly problem before you even get into property management expenses.

HUGE OPPORTUNITY

If legislation forces lenders to become landlords it will do two things. 1) Increase lenders desire to avoid foreclosures which translates to more short sales at bigger discounts and 2) Increase discounts on REO Properties.

The discounts must be given because the new investor has to deal with tenants and could be forced into holding the property 6 months before they can pursue their plans for the property.

The opportunities in foreclosures are unprecedented. If you are not in short sales either you are making too much money doing other things or you have no legitimate excuse. With my short sale system you crank out short sales packages in 5 minutes then let the packages and follow up faxes do the work for you. It doesn't get any easier.

I’ll also be covering short sale secrets February 29-March 2 at my 14 Person Private Seminar on Wealth Explosion and Asset Protection. Only 14 people will be accepted and you will leave with all of your asset protection and estate planning entities in your hands AND with an understanding on how to use them! The wealth explosion will blow you away with how to get 42% guaranteed returns and so much more. This will be an intimate and intense private seminar unlike anything you’ve ever experienced. Three full days with me and one of the best asset protection attorneys in the country.

Now Go Buy A House!

Gerald Romine

PS – The private seminar on wealth explosion and asset protection is something you should seriously consider. With only 14 people we're going to cover things in depth in a way that can't be done at a 100 person boot camp. If you paid a competent attorney to just create the entities it would cost you over $25,000! We're not giving you forms, we're creating the entities you need and teaching you what to do and how to do it because only when you understand what your doing and why do you have asset protection. It's a huge difference.

The Weird World Of Short Sales

If you are in the short sale game right now then you understand that lenders are playing hardball and it seems to be a nationwide challenge.

I recently took a 300K first down to 200K. Things were looking good! Then I had to deal with GMAC on the second. Shouldn’t be a problem, right?

Boy was I surprised when GMAC was not willing to do anything. After a long healthy conversation with the Loss Mitigation Supervisor I learned that GMAC will only accept a short sale that comes in at 95% of the market value.

Okay – you can stop laughing because this is not a joke. The supervisor AGREED with me that something today beats nothing at the foreclosure. He KNEW their policy was insane but his hands were tied.

What are my choices?

1) I could buy the note and finish the foreclosure. Tried that but the 1^st wasn’t willing even though they get the same net.

2) I can continue to negotiate hoping GMAC’s policies will change – they may.

3) I can hope GMAC sells the loan to another lender then start over.

The reality is this deal is likely dead and I know it. Luckily I have honest direct relationships with my sellers so I informed them and they want me to continue. Time will tell if I get it through.

Tip For The Day: Short sales are a numbers game – do not get emotionally involved. Some will work, some won’t. Just make sure you can quickly prepare short sale packages. REPP does the job.

Now go buy a house!

Gerald Romine

PS – Things are changing at www.kickassrealestate.com. Check it out.

Land Trust Article

Lately I’ve been getting a lot of questions about land trusts and it seems there is a lot of confusion. So today I thought I would cover the subject in detail.

Land trust

A land trust is an agreement whereby one party (the trustee) agrees to hold ownership of a piece of real property for the benefit of another party (the beneficiary). Land trusts are used by nonprofit organizations to hold conservation easements, by corporations and investment groups to compile large tracts of land, and by individuals to keep their real estate ownership private, avoid probate and provide several other benefits.

A community or conservation land trust is an organization established to hold land and to administer use of the land according to the charter of the organization. A land trust is a useful way to manage complex divisions of the Bundle of Rights that people can own in real estate, and can be used to manage something as large and complex as a multi-state REIT, or as common and small as a single-family home.

Corporations sometimes set up land trusts when they want to compile large tracts of land without arousing suspicion or alerting people to their plans (which would cause the asking price to rise). For example, the land for Disney World near Orlando Florida was put together by using many land trusts to buy smaller tracts of land.

Individuals use land trusts mainly for privacy and to avoid probate. No one knows what one's bank balance or stock investments are, yet anyone with an internet connection can look up a person's real estate holdings. A person who has an auto accident or a doctor who accidentally injures a patient is a much better target for a lawsuit if he or she owns real estate investments. So some investors buy their properties in land trusts so their name does not appear in the public records. The land trust also allows the property to immediately pass to their heirs at the moment of death, rather than go through a long probate process.

Some of the other advantages of land trusts for individuals are:

• Sales price of the property can be kept off the public records
• Property taxes are lower if the purchase price is kept private
• Judgments or liens (such as IRS liens) against an individual's name are not a lien against their land trust property
• Partners can more easily continue a project if one dies or is divorced
• Interests can be transferred quickly without recording a deed
• Managing a rental property is easier when the trustee can be blamed
• Negotiating a purchase or sale can be easier when the trustee can be blamed
• Liability on financing can be limited to the assets of the trust

Investment trust companies hold property for investment purposes and non-citizens who want long-term access to land in Mexico often enter real-estate trust agreements, called fideicomiso, with Mexican citizens, but land trust more often refers to a community scale organization. Community land trusts are established to provide low- and middle-income families access to affordable housing while conservation trusts protect environmentally, historically or culturally valuable places. Land trusts are also in place to protect farmland and ranchland. Despite the use of the term "trust," many if not most land trusts are not technically trusts, but rather non-profit organizations that hold simple title to land and/or other property and manage it in a manner consistent with their non-profit mission.

Land Trust History

Land trusts have been around at least since Roman times but their clearest history is from the time of King Henry VIII in England. At that time people used land trusts to hide their ownership of land so they would not have to serve in the military or suffer the other burdens of land ownership. For example an elder uncle would hold his nephew’s land so they would not have to join the king’s army. To put an end to this King Henry in 1536 passed the Statute of Uses. The statute declares that if one party holds land "to the use of" or in trust for another ("beneficiary"), legal title is vested in the beneficiary. Obviously, if the statute had been given literal effect, there would be no trust law. Shortly after the statute was enacted, however, English courts declared that the statute only applied if the trust was passive, that is the trustee didn’t do anything but hold the land.

In the late 19th century in Chicago some people figured out that land trusts would be good things for buying property for investors to build skyscrapers on, and city aldermen figured they would be a good way to hide their ownership in land since they were forbidden to vote on city building projects when they owned land nearby. Since the law of England including the Statute of Uses was the law of America the question arose whether a land trust would be valid. This question went to the Illinois Supreme Court which ruled that if a land trust was set up with some minor duty on the trustee (such as to deed the property to the beneficiaries 20 years later), then the trust would not be considered passive and would be valid. Thus the land trust in America today is often called an “Illinois-type” land trust.

Land trusts have been actively used in Illinois for over a hundred years and in recent decades have begun to be used in other states. The creation of land trusts is not a recorded document, however the declaration of a trust is through a "deed to trustee". Many believe that the trust is to be filed as a public document, however this removes all of the asset protection provided by the formation of the land trust. Also anyone can create a land trust.

How To Set Up A Land Trust.

Land trusts are not difficult to use or understand but having the right land trust is essential. It is my opinion that ALL of your real estate should be held in land trusts as a way of keeping your name off public records and as the first step in asset protection.

For more information on land trusts mouse here.

What Credit Card Companies Don't Want You to Know

I just read an article that I had to share with the Romine Faithful. Wow, talk about a powerful clause that could really hurt you!

Here it is...

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What Credit Card Companies Don't Want You to Know

by David Bach

Of all the games the credit card companies play that end up costing you thousands of dollars (late fees, over-limit fees, transfer fees, and so on), it's always been the interest rate game that hurt the most -- until now.

There's a new, completely legal game they're playing, and it can literally wipe you out financially if you're not careful.

The Universal Default Clause

If you own a credit card, you know by now that if you're late with a payment the credit card company will charge you a late fee in addition to raising your interest rate. But did you know that they can raise your interest rate if you've made a late payment on any of your other cards, including those issued by other companies?

Not only that, but your interest rates can skyrocket to 30 percent or more if you make a late payment on your car loan, mortgage, or even your phone bill!

"How can that be legal?" you may ask. The answer is found in the fine print of your credit card agreement, and it's called a universal default clause. According to the Institute of Consumer Financial Education, currently almost 40 percent of credit card issuers apply this policy to their customers.

A Late Payment 'Trigger'

Generally, a universal default clause states that a creditor reserves the right to penalize you with an increased interest rate if you're late -- that is, in default -- of a payment to any other creditor. They justify this practice because, in theory, if you pay any of your creditors late, you pose a greater credit risk and are less likely to pay your debt.

Your creditors also have the right to routinely monitor your credit file. So a creditor with a universal default clause will be watching -- and waiting.

Let's say your Visa card has a universal default clause. Any late payment -- whether it's on your utility bill, home equity loan, or Macy's credit card -- acts as a "default trigger" allowing the bank that issued the Visa card to double or even triple your interest rate overnight. Your all-important credit score will be hurt as well.

According to a study by the nonprofit advocacy and education group Consumer Action, the top three default triggers that cause your interest rates to spike are a decline in credit score, paying your mortgage late, and paying your car loan late.

Other Triggers to Worry About

Under the universal default clause, your interest rates can be increased for several other reasons, including exceeding your credit limit, bouncing a check, having too much debt, having too much credit, getting a new credit card, applying for a car loan, and applying for a mortgage loan.

How does this affect your financial future? Take a look at the numbers. Let's say you're an average American household, with $8,000 of credit card debt. Assuming you make no additional purchases on your card, you have a 9 percent interest rate, and you make the minimum monthly payment, it'll take you 218 months (18 years) to pay off your debt and you'll end up paying $3,334 in interest.

Now let's assume that for whatever reason you were late one month with your car payment. This late payment triggers the universal default clause with your credit card issuer, and now your penalty rate gets increased to 24 percent (the average default rate in 2005). It'll now take you 679 months (56 years) to pay off your credit card debt, and get this -- you'll pay $30,813 in interest.

Staying Ahead of the Clause

Here are six ways to protect yourself from interest rate hike triggers:

1. Stay away from credit cards with a universal default clause.

If you're looking to open a new credit card account, be sure to choose one without a universal default clause. This means you have to truly read the fine print. If you're confused by the fine print (as many are), call the credit card company and ask what specific circumstances will affect your interest rate.

I read recently that Capital One cards don't have a universal default clause (although you should double-check before applying), and Citi has dropped its universal default policy as well. In addition, sites like CardWeb.com, Bankrate.com, and LowerMyBills.com let you compare credit card offers, so visit them before you apply.

2. Know your current obligations.

Check your current statements and credit card agreements to find out your current interest rates, and to identify which cards have a universal default clause that you weren't aware of until now. Again, if you're uncertain after reading the fine print, call your credit card company.

Consider transferring your balance from a card that has the universal default clause to one of your cards that doesn't. But don't rush to cancel the card altogether, because it could have a negative effect on your credit score.

3. Run your credit report.

Not only do you need to know exactly what your current interest rates are, you also need to know exactly what's on your credit report. Visit Freecreditreport.com or myFICO to order your credit report and credit score today.

4. Pay your bills on time.

According to the American Bankers Association, late payments for most types of consumer loans were on the rise during the third quarter of 2006. If you're having trouble with your credit card payments, at the very least strive to make your minimum payment on time.

5. Be proactive -- call your lender for relief.

If you're struggling to make monthly payments on your other bills, like utilities, car payments, or mortgage payments, call your lender to see what options they might be able to offer you. They might be able to adjust your monthly payments so that they're more manageable.

Your goal is to protect your credit report and credit score with a consistent record of on-time payments.

6. Fight back for your money -- write your local legislator.

Right now, there are amendments to the Truth in Lending Act that, if passed, would prohibit many unfair practices within the credit card industry -- including the universal default clause.

As a consumer, you can take action by letting Congress know that you want laws to protect your rights. For more information on how you can be heard, visit Consumer Action's web site.

As I write this, Congress is holding hearings to discuss the abusive and deceptive practices of the credit card industry. Read more about it here.

A Good Night's Sleep

Obviously, what you don't know really can hurt you. Check today and see if you have the universal default clause on your credit cards.

If you do, be careful to stay on top of your debt. Better yet, find a credit card that doesn't have the clause -- you'll sleep better at night.

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Now go buy a house!

Gerald Romine
www.KickAssRealEstate.com

PS - It's much better to learn how to buy wholesale using the greatest flipping system for real estate than to get yourself into financial trouble by spending money you don't have.

Killer News For Real Estate Investors

Last Friday marked a huge turning day for real estate investors nationwide and is very bad news for first time home buyers, real estate agents, investors(yes, even us because we sell to other investors) builders, loan officers, and just about everyone in the residential real estate and mortgage business.

What Happened That Rocked The Real Estate Industry?

Foreclosure rates have been climbing and the valuations of lenders and especially secondary lenders has taken a beating. Many of the companies specializing in 100% sub prime loans that have been extremely popular over the last 5 plus years are struggling with many going out of business.

And when you build your business on shaky ground with buyers that can’t qualify for squat it is only a matter of time before that house of cards comes tumbling down. So it is no surprise that the lending world is changing by leaps and bounds.

In plain English this means we’re back to buyers having to qualify for houses but not having the resources like 100% down financing to buy them.

We’re talking about buyers needing to have much better credit scores and much better down payments.

Combine that with the weak market and foreclosure boom and you have The Perfect Real Estate Buying Bonanza waiting to happen!

To Capitalize On This Bonanza You Must Have These Techniques In Your Arsenal Right Now!

1) Wholesaling and Subject To Buying
2) Short Sales on Pre Foreclosures

If you are not utilizing these systems you are losing money! If you make one mistake you run the risk of not only making somebody else’s problem your own but losing a lot of greenbacks. Dough you could have kept had you only known.

For wholesaling and buying subject to I conducted a boot camp that was recorded live and is available for you to take advantage of if you are wise and want to take advantage of the coming Perfect Buying Bonanza.

The truth is these CD’s are unedited and raw. Every question, every suggestion, every single reason on what to do and how to do it is covered in detail. All the forms you need, it’s all there waiting for you.

My guess is that your business is sliding backward and you are giving up huge profits and opportunities. Here’s where to go to learn wholesale buying and subject to.

The second part of the Perfect Buying Bonanza is in full swing right now. Preforeclosures and short sales are hot and getting hotter. Upside down houses are everywhere. People are going under and the opportunity to short houses has never been higher. My system completely automates the short sale process and working with the lender to get deals accepted. Period. Either you see the need to have this system or you don’t. It’s so obvious I won’t even go on.

With the information I provide you will have all of the tools you need to jump in the middle of this storm and Kick Your Business Into High Gear Like Never Before!

Now go buy a house!

Gerald Romine
www.KickAssRealEstate.com

PS - It's time to GET IN the real estate game in a big way!