Welcome to "Building Passive Income Through Real Estate". Wow, it's been a long time. After taking a few months off, we are back online. Rick, Rob and I have been busy travelling at following up on our leads kicking up our marketing efforts and helping out as many people as we can. I really appreciate everyones patience while I take some time off from the newletter. It was also great to hear from many of you, inquiring about the newsletter and the fact that you signed up but didn't recieve anything. If you found out about the newletter on Ryze.com, be sure to stop by my page and leave a note. Ryze has been great, during my time off from the newsletter, Rob and I spent a couple weeks in Asia. While we were in bangkok, we hooked up with a couple Ryze members. One was Anne Frazier from Bangkok Capital Alliance. We had a great dinner with her at our hotel. Her company has gone into Bangkok and bought the non-performing notes there. They are now going through those notes and working to either get them current or foreclosing on the properties. The foreclosure market there seems even more active than here in the Salt Lake valley. In India, we also met up with a Realtor and Developer in Bamgalore and Madurai. India has changed a lot since I had been there last. Much off the building is very modern and Italian Kitchen are now very much the "in" thing now. Of course labor is cheap and the numbers are very good for new development in these cities. We even had a chance to tour a few new developments that were self contained neighborhoods like PUDs we have here in the states.

Besides our Masters Symposium in Las Vegas in January with Dolf DeRoos and Ron LeGrand, we also attended Peter Conti and David Finkel's seminar in Vegas. If you get a chance, their weekend event is worth the time. I suggest you stick around for the question and answer, that is where the real meat comes out.

We also took some time to put togethor a new website www.WealthMastermindGroup.com. I have created some discussion forums up there. If there are some other topics you would like, let us know and we'll get them created.

Well, now that were caught up, what should we talk about this week.
Contents:
1. Looking at Ratios instead of Cash.
2. When the title is clouded, expect thunderstorms.

Looking at Ratios instead of Cash.
by Kevin Davis

When we first started out, we looking at each deal as to how much equity in dollars were there. This is a very poor way to look at the deal. What you are really interested in as an investor is the ratio of the cost of the property, and the value of the property. If you are working with properties requiring repair, your looking at two ratios, the before repair value and after repair value. Ideally, if you are purchasing a property and you are putting up the money instead of using the existing financing, you want to be buying at a max of 60% ARV (After Repair Value). Now depending on the market, these deals can be difficult to find. My arguement for that, is they are worth the wait. Of course, there are always exceptions to the rule, whatever you do always make sure you are factoring in all cost involved with the property. It is much easier to move a property at 80% ARV than it is trying to sell a property at 95% along with everybody else in the world. In soft markets like Salt Lake, properties will stay on the market a long time if you don't have a decent margin.

There also ways to work with properties with no equity. In one of the future issues, I'll have my partner Rick Dearr fill you in on how we handle those properties.

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When the title is Clouded, expect Thunderstorms.
by Kevin Davis

If you have been with us for a while, you will remember the four condos we were buying down in Las Vegas. After several months of chasing the truckers that owned the property acroos the country with faxes trying to close the deal, we ran into a clouded title. While three of the partners that owned the property wanted to sell and listed the property, one more did want anything to do with it. Now the battle continues over our earnest money since they should have never listed the property and accepted our offer without the fourth partner. Another thing you want to keep in mind when working with some properties is some owners may have prepayment penalties on their loan but don't realize it. This is especially crucial when working with existing financing if your planning on turn the property before the prepayment term expires. It is an additional cost that can really nip you in the butt.

Building Passive Income Through Real Estate is published by Kevin Davis, Editor & Contributing Author. Every week.

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