Self Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's

Happy FRIDAY, SDI Nation! Hey, even if you have a self-directed IRA or 401k, you might still want to invest in stocks, which is totally kosher. But here’s the question: Can you trade stocks on MARGIN in your self-directed account? I’m Bryan Ellis. I’ll tell you the answer RIGHT NOW in Episode #216.

What You Will Learn: ~What does it mean to "trade on margin"? ~Can your self-directed IRA use a margin trading account? ~What happens to an IRA that uses a margin account?

There's a LOT MORE in the video, please check it above or at: https://youtu.be/l-O_xs-EWl8 http://www.SDIRadio.com/216

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If you missed the last episode of Self Directed Investor Radio, check it out here: http://www.SDIRadio.com/215

Invest Wisely Today, Live Well Forever!

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Why do self-directed IRA’s exist? The tale is replete with scandal, theft, dishonest labor unions, and the annihilated retirement savings of the employees of a once-great American company. Strap on your seat belts my friends… this is going to get a little bumpy. I’m Bryan Ellis. This is Episode #213.

What You Will Learn: ~Why IRA's were created to begin with ~How the auto industry & destructive labor unions helped lead to the creation of IRA's ~Distinction among IRA's, "self-directed" IRA's and TRULY Self-Directed IRA's

Links and Resources Mentioned: *Wall Street Journal Article about Pension Failures

My friends, have a great weekend, and remember: Invest Wisely Today, Live Well Forever!

Please check out Self Directed Investor Society here: http://www.SDISociety.org http://www.Facebook.com/SDISociety http://www.Twitter.com/SDISociety http://www.Instagram.com/SDISociety http://SDISociety.Tumblr.com

Be sure to SUBSCRIBE to our channel for more news and training for affluent self-directed investors!

This video is available at: https://www.youtube.com/watch?v=B_Jyq0kjVic

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From the beaches, to the bikinis, to the nightlife… and yes – the real estate market – this Oceanside paradise is the essence of the word HOT!  Everything about it screams YES! to many eager real estate investors.  But to the discerning eye, it appears a storm may be brewing below the surface, and you need to know about it.  I’m Bryan Ellis.  This is Episode #212.

My friends, it’s Monday, and that means it’s time for MARKET MONDAY, a new and weekly feature here on SDI Radio where we take a real estate market, consider what’s being reported about it, what the data is REALLY saying, and give you a basis to consider action… or avoidance!

And with today’s Monday Market Analysis is my business partner – and also, much to my delight, my wife – Carole Ellis, host of the Real Estate Investing today podcast, a contributor to the Huffington Post and editor of the 700,000-subscriber-strong Bryan Ellis Investing Letter.

Carole, what do you have for us today?

Bryan, you said it right.  Today’s market, Miami, Florida – the magic city – is blazing hot, and it’s real estate market has followed suit, and things could get even better as a result of foreign capital looking for safe havens in light of Britain’s recent exit from the European Union.

There’s plenty in favor of Miami real estate, as it has posted 8.6 percent appreciation in the past 12 months, and it’s showing huge construction activity during a period of time in this country when new construction is in hot demand but hard to find.  Plus, it’s MIAMI… it’s just cool to own property in a place like that.

But all may not be as it seems in this most glamorous of locales.

Here’s my gut sense of things:  It looks like the boom may have already happened and could be headed for the exits.  I base this on three indicators that are readily available, but seem to be overlooked by the press and the economists.

• FIRST: Miami’s hot housing numbers have been heavily bolstered by LUXURY housing… and that segment is showing serious signs of weakness. Before the housing crash, the Miami luxury market was booming, and it recovered relatively quickly compared to other U.S. markets thanks to Russian, Chinese, and South American investors.  But since then, the U.S. dollar has strengthened substantially, essentially making U.S. real estate more expensive to foreign investors.  A great example is Russian capital, which funded a whopping 20% of the luxury condo purchases in Miami in 2013… but plunged to 6.6% last year… a stunning decline of two thirds!  Simultaneously, transaction volume FELL by 20%... all ominous signs.  Could the demand for a safe haven created by Brexit revive this market sector?  Sure… but for how long? 

• SECOND: The “Boom Premise” is based on a myth. When investors (foreign and native) started buying in Miami, the premise was that Miami property was a good investment because luxury buyers (specifically monied retiring baby boomers) were quote “moving back to the city” to live in areas with rich entertainment, good healthcare options, and high walkability. Unfortunately, most of the buyers have been extremely eager INVESTORS and *not* baby-boomers. And when investors start outbidding each other in a rabid attempt to get into a market at any cost, it’s not usually a good sign for the strength of the market.

• THIRD: Developers are not taking the hint. Although dozens of projects in Miami have been postponed or canceled since the end of last year, new construction in the area is still outpacing last year. Developers have sunk more than $4 billion into construction since January of this year, and with comparable west coast markets like San Francisco and L.A. posting a serious DEARTH of new construction, many investors are tempted to think that any new construction in a hot market is a sign of health and growth potential. However, the new construction in Miami is not, for the most part, affordable, lower-end housing but high-end housing, which further bloats an already-overbuilt sector.

So does that mean that you should cross Miami off your list completely? Not necessarily, but I believe you should view Miami as a hot-right-now market, and not an opportunity just waiting to happen.  Despite this tepid endorsement, I do see two points of opportunity in this market:

• First, look into lower-end housing in Miami, where home prices have jumped 13 PERCENT in the last 12 months. For these properties, demand is growing along from a population of buyers who have been renting and now want to own and feel they have the wherewithal to do so. 
• Second, remember that the Miami-Dade area has the dubious distinction of being home to more underwater properties than every other market in America, excluding only Las Vegas. So if you’ve got the skills to work directly with banks.. or even with some underwater home owners… then Miami presents a large amount of opportunity.

My bottom line on Miami:  It’s an interesting market, and there is some opportunity scattered throughout it.  But be cautious… and let the core of every investment decision you make in Miami and elsewhere be this:  Always respect your own capital!

Well said, Carole!

Here’s what I hear in that report, my friends:  if you have a particular interest in Miami, then there are some reasons to dig deeper and look closer into specific segments showing promise… but what I do NOT hear is any reason to think that Miami should be counted on for profitability if you’re buying at retail and merely hoping for continued appreciation.

In every real estate investment decision, caution should be central.  But in some markets with histories of astounding volatility – and Miami is certainly one of those – caution should rule the day.  Ask yourself these 3 questions:

Is it SIMPLE?

Is It SAFE?

Is it STRONG?

It’s got to be ALL-3 to make the grade as an SDI-Strong investment… it’s got to be ALL 3 to be worthy of YOUR capital, my friends.

Folks, happy Independence Day and God Bless America!  Enjoy the day with your family and friends, and remember:

Invest wisely today, and live well forever!

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If you want to invest in real estate through your retirement account, isn’t the easiest way to do that to buy into a publicly-traded REIT – a real estate investment trust – rather than buying physical real estate?  This question comes from Mark, an ophthalmologist in Atlanta, Georgia.  Mark – and SDI Nation – you’ll get the answer to that question RIGHT NOW.  I’m Bryan Ellis.  This is Episode #211.

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Hello SDI Nation!  Welcome to the podcast of record for Savvy Self-Directed Investors like you,  where each day, we guide you to FIND, UNDERSTAND and PROFIT from exceptional investment opportunities!  Hey folks – be sure to stop by SDIRadio.com/211 – that’s the page for today’s Episode #211, where you’ll find all of the links and resources I mention on today’s show.  Or just text the word SDIRADIO to 33444 and we’ll send you all the info you need.

It’s a beautiful day in America, my friends!  The real estate portfolio of the Ellis Household expands by 3 more properties today, each of which is a single-family property that’s fully renovated, rented, managed and producing exceptional cash flow!  Well, technically, it’s not the Ellis household, as we don’t own valuable assets in our own names, nor should you.  But you get the point!  Hehehehe

Folks, I feel like the luckiest man alive to have the chance to do deals like the one we’re closing today.  Can I tell you how this deal went down?  I think you’ll appreciate it.  So one of your fellow listeners – hey Chip! – had asked to purchase a portfolio of rental properties, which we arranged for him.  Sweet deal… only about $150,000 investment, and the net yield after ALL expenses was solidly above 10%.  Well, that’s what Chip was interested in doing, but something happened in his personal life and he needed to delay that purchase for a bit.

Well, folks… ultimately that was for my benefit.  Because I looked at that deal and realized, yet again, that what I say is true:  I don’t sell assets that I wouldn’t buy.  So this package of 3 properties, well… my lovely wife Carole and I decided that they’d be an excellent addition to our own portfolio.  And fate has favored that decision so far, because the appraisals came in even higher than we expected.  So now, we’ll have 3 more properties yielding double-digit net returns… and I couldn’t be happier!

So, onward to the excellent question from Mark, an ophthalmologist right here in the ATL, Atlanta, Georgia, a BOOMING city that offers all of the wonderful things that come with a big city… but at a substantially lower cost than virtually every other big city!

Mark asks this question:  “Hi Bryan, I really enjoy your show.  I’d like to increase my portfolio’s exposure to real estate.  I have about $250,000 I’d like to invest.  I appreciate your endorsement of turnkey-rental properties and I’m seriously considering that approach, but wouldn’t it be much simpler, and just as effective, to purchase a publicly-traded REIT rather than buying physical real estate?  Thanks again for your show, I’m glad you’re back.”

Mark – thanks for a great question!

For those of you who may not be aware, a REIT – more precisely, a real estate investment trust – is a company that buys cash flow-producing real estate and, by law, must pass on 90% or more of the net income it generates to its share holders.  It’s kind of like a mutual fund that invests only in cash flow producing real estate.  And there are several REIT’s that are publicly traded, which means that all you have to do to invest in them is to call up your stock broker and place an order, and voila!  Suddenly, you’re generating real estate income without the hassle of buying or owning physical real estate.

Sounds enticing, doesn’t it?  It is!  It’s a sexy proposition if you’re looking for the benefits of real estate ownership.  Taking the REIT route is certainly simpler than owning physical real estate, and it doesn’t even require one to set up a truly self-directed IRA.  The partly self-directed IRA’s at Schwab or eTrade or elsewhere will work fine for investing in REITs.  And since you’d likely choose one of the publicly-traded REITs, your principal is quite liquid, so you could convert your investment back to cash very easily.

It’s not all roses with REITs though, Mark.  There are 4 big votes against them, in my opinion:

• First, they can be VERY volatile. REITs slip in and out of favor very quickly, and that has a direct impact on your share price… aka, your principal investment.
• The second big vote against them is that REITs don’t provide a real hedge against currency fluctuation like direct ownership of real estate. This is a real consideration, folks – look at what BREXIT did to the British Pound just one week ago?  Currency risk – you know it as inflation or deflation – is a very cruel beast, and direct ownership of real estate helps to hedge your portfolio against it, whereas REIT ownership does not.
• Third: There’s very little tax flexibility with REITs.  Income is taxed as ordinary income, period… a problem if you’re a high income earner.  And you don’t get to do tax-free exchanges – such as the 1031 exchange – when investing in REITs, only with physical real estate.
• And fourth: You’re forced to buy at retail when buying REITs.  If a REIT share is priced at $100, you’re going to pay $100.  But with real estate… not so much!  We routinely buy real estate – fully renovated – at 60 to 70 cents on the dollar.  Yes, it takes some work to find those deals, but there are plenty of them out there.  If I could buy REITs at 60 to 70 percent of their public price, I’d be very tempted… but it doesn’t work that way.

So should you invest in REITs or physical real estate?  I believe you should default to PHYSICAL REAL ESTATE unless one these two things are true about you:

• First, If your primary concern is liquidity – meaning that you need to be able to convert your investment to cash in a matter of hours or days – then a REIT is your best choice.
• Second, If you’re absolutely terrified by the thought of the things that go along with owning real estate, like maintenance costs or legal liability, etc., then you should invest in REITs… but ONLY after you educate yourself about those issues, all of which can be mitigated with proper planning.

So then, Mark and SDI Nation, if you’ve opted towards physical real estate, the question becomes:  WHICH property do you purchase?  Hey, if you’re a full time real estate investor, then you’ve probably got that covered.  But if not – if you’re an ophthalmologist like Mark or an engineer or an entrepreneur or whatever it is you do – and you want to continue doing that thing while enjoying all of the benefits of real estate ownership, then do this:

Stop by SDIRadio.com/211 and check out a case study of an excellent – but rather common – turnkey rental property deal.  Remember from before… the type of property where you write one check and suddenly you’re the owner of a property that’s renovated, rented, and managed without your involvement.  This particular deal is actually available… and it’s a great example of what’s possible.

My friends, have a wonderful weekend and remember this:  Invest wisely today, and live well forever!

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Real estate-secured notes are an exceptional asset class that offers the simplicity, safety and strength that wise investors seek.  And without a doubt, one of the best sources for getting the best note deals is from other individual investors.  But who, exactly… and how?  I’m glad you asked!  Today I share with you 3 key sources for acquiring privately held real estate notes.  I’m Bryan Ellis.  This is episode #210.

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Hello SDI Nation, welcome to the podcast of record for savvy self-directed investors like you, where each day we help you to FIND, UNDERSTAND and PROFIT from exceptional investments.  Be sure to check out the show notes for today’s episode #210 by visiting SDIRadio.com/210.

One such resource you might enjoy is an article I recently wrote for TheStreet.com which addresses the weakness in the luxury end of one of the biggest real estate markets in the world:  New York City.  For those of you who are inclined towards focusing your investment capital on major money centers like New York City, you’ll see some really solid reasons why it’s worthwhile to expand your horizons a bit.  Again, the link to that article is on today’s show notes page at SDIRadio.com/210.

And with regard to analyzing specific markets, I have great news, my friends.  Beginning this coming week, you’ll get to enjoy “Market Monday”… one episode per week – on Monday, not surprisingly, hehehe – that highlights a particular real estate market in the U.S., and why it is – or maybe IS NOT – a suitable investment target for YOU, the self-directed investor!  This isn’t a rah-rah session… and the analysis is just as likely to motivate you to “stay out” as to “jump in”.  The point will be both to educate you about current conditions in a particular market, along with showing you some fundamental factors that are supporting – or weighing on – particular real estate markets.  So look for the first edition of SDI’s Market Monday episode this coming Monday, and if there are any particular markets you’d like for us to analyze, please drop a note to me at [email protected]!

So let’s return to note investing, and what is likely the single best source for acquiring them for you as an individual investor.  That source, generally, is private investors… other individuals like me and you who – for one reason or another – find themselves in possession of real estate notes.  Let’s break this group down into 3 categories:

Category #1:  These are the other individual investors who presently own real estate notes.  They may have acquired these notes because they are in the business of selling their own properties through seller financing which inherently creates a real estate note, or maybe they acquired the note in some other way.  These people are frequently easy to find because you’ll see signs or other advertisements that offer “owner financing” or “seller financing”.  Just search CraigsList in your target market area to find some of them.  This verbiage in an ad is a dead giveaway that the person selling the property is creating a note.  At that point, the relevant questions become:  Do they want to sell the note, and if so, is it a good investment?  On the first point – do they want to sell – the only way to know is to ask!  On the second point – is it a good investment – we’ll defer that question just a bit, so stick with me.

Category #2 of private note sources:  Create them yourself!  Look, this isn’t a good option for everybody, and I don’t want to suggest that it is.  But for those of you who are already landlords, the choice of monetizing your property through seller financing isn’t substantially different than monetizing it through a lease.  The big differences are that you’re getting a down payment that you keep, rather than a security deposit you must return, and that you don’t have to think about maintenance or management or landlord legal liability ever again.  So for those of you who are ALREADY actively involved as landlords – such as those of you who are active, day-to-day real estate investors – this could be a great option for you. 

And finally, there’s Category #3:  Me.  That’s right, yours truly.  My business produces a lot of very high-quality real estate notes, and we’re fond of partnering with investors on these notes.  I don’t actually sell a lot of notes outright because they are, to me, a highly desirable asset.  Instead, what I do is look for investors who can benefit from the type of cash flow that notes can produce, and basically allow them to co-invest with me so that they are entitled to receive the payments from these notes for a long period of time… and in a manner that’s incredibly low-risk for their capital.  I won’t delve into the details right now, but if you’re looking for a way to generate between 6 and 12% on your money in a really simple way by co-investing with me, just drop me a note to [email protected].  Those deals are usually fairly low-dollar, requiring on average LESS than $50,000 per note, so it’s not a huge capital commitment.

So there you have it, folks:  3 great options for buying privately-owned real estate notes:  You can seek out people who are selling houses with seller financing; You can sell properties you already own with seller financing, and create a note that way; or you can just reach out to me and I’ll handle the whole shebang!

Hey, before I let you go to resume all of the important things you’ll be doing today, I’d just like to say thank you.  As long-time listeners know, I had to take a hiatus from this show for a couple of months due to some big things going on in business and life that demanded my singular focus.  My absence tugged at me every single day, because this podcast is, frankly, my favorite thing to do each day.  And so I was quite concerned that my audience may have dissipated by the time I returned.  And that’s why I’d like to say thank you… based on being back for just about a week, I’d say that SDI Nation is alive and well… and may have even GROWN during my absence!  You folks are amazing and your attentiveness is so humbling.  I know that YOU… the person who is listening right now in your car or on your phone or wherever you are… YOU are the reason for the success of Self Directed Investor Radio, and I thank you.

That’s all for today, folks.  Remember that you can catch this show on video too… We take video of my recording session each day and add some other nice content to it as well, so if you’re listening to the sound of my voice right now, but maybe you’re a more visual person, stop by SDIRadio.com/YouTube and SUBSCRIBE to the SDI Society Youtube channel so you get updates with each new episode we post.

Have a great Wednesday, folks, and remember:  Invest wisely today, and live well forever!

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We return from the detour caused by the BREXIT to focus on my FAVORITE asset class: Real Estate Notes!  Here’s the big question: Where do you find them? Join me in Episode 209 to find out what kind of note is right for you.

If you missed any of the last three episodes leading up to today’s show, I respectfully recommend that you go back and take them in before continuing today. Everything you’ll hear today builds on that information, particularly episode numbers 206 and 207.

What You Will Learn:

• What a real estate note is
• Where to find real estate notes
• How to get on the “inside” of the real estate notes game
• Where and how to get real estate notes
• The differences between note brokers and individual investors

Links and Resources Mentioned:

• Episode 206: a TERRIBLE LAWSUIT that should terrify Rental Property Owners
• Episode 207: Bryan’s Favorite Asset Class
• Episode 208: Brexit: Does it Really Matter to You?

My friends… it’s so good to be with you again and always remember this:

Invest wisely today, and live well forever!

Social Media Links

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What is Brexit?  How will it affect your portfolio?  And is it important enough to justify my delaying by one day the info I promised you about note investing?  I’m Bryan Ellis.  I’ve got all the answers for you RIGHT NOW in Episode #208.

Hey folks be sure to check out today’s show notes page at SDIRadio.com/208 or if you’re not in front of a computer, just text the word SDIRADIO with no spaces or periods to 33444 to get access to the resources from today’s show #208.

In the last episode, we talked about my favorite asset class… real estate notes.  If you didn’t hear that one, you should definitely check it out right now.  At the end, I promised to tell you where to find some of these great assets.

Well, my friends, I have not forgotten about that, but there’s been some very important economic news that’s relevant to you… and to your future decision making as a self-directed investor.

Friday last week, the world was shocked by news of the “Brexit”… that’s the pop-culturish term used to describe the decision by the people of Great Britain to exit the European Union.  A bit of context will be helpful here, because there are some really important lessons for me and you as investors in this experience, and in the fallout from it.

Back in the 90’s Europe had had enough of getting their clocks cleaned economically by the US in particular and other economic powers in general.  Thus, the idea of a European Union was pitched… a political and economic confederation intended to give Europe more power and influence to compete successfully.

Of course, as political things go, there was more to the story.  The real driving force behind the EU was an ideology known as globalism, in which political leaders ostensibly place the interests of the world at large above the interests of their own countries.  That sounds nice, but it never, ever works.  In reality, globalism is a ploy by political leaders to expand their power over the entire globe rather than just their own countries.

So the EU was formed with many major countries of Europe involved, including Great Britain, Germany, France and others.  So what happened?  What always happens when bureaucrats exert power over economies:  The EU economy weakened and weakened to where it is now hobbling along at, according to the Economist, at less than ½ % per year.  That’s pretty pathetic.

Furthermore, to implement the cultural changes needed to truly implement globalism, something else had to happen:  Unique national culture had to be diminished in each member country.  This is most easily accomplished by essentially erasing national borders and allowed unfettered immigration.

To that effect, the United Nations – that most globalist of entities – recognized that European citizens were aging out of existence with a very low rate of childbirth, and so the UN recommended the “replacement” of Europe’s dwindling population with Muslim freeloaders.  They’re not refugees, they’re freeloaders.

That’s not merely opinion.  Empirical evidence shows that the only “benefit” brought by Muslim immigration is expansion in government spending to care for them, as data from the Gatestone Institute shows that Muslim unemployment rates in Britain are about 50% for men and 75% for women.  I’m told that such behavior is actually condoned in the Islamic faith, which encourages Muslims to idly profit from the efforts of infidels – that’s what they call non-Muslims like me.

So, bottom line:  The EU is formed… they take over the economies of all of the biggest European countries… they begin importing Muslim immigrants by the millions, who promptly take up a spot on the public dole, and are paid for by the efforts of the millions of hard-working citizens who contribute to society…

…and a certain frustration has been building and building and building over time.  It was a deep, intense nationalistic frustration from people who loved their country, and who couldn’t stand that it was being overtaken by people who were there with zero regard for the law or the culture.

And so the Brits decided to unwind themselves from the EU…. And shook the world, economically and politically.

I commend them for this move.  Great Britain once was great.  It can be again.

But what does this mean for you and me?

There will be economic turbulence for a few days, but beyond that, it means a few things.  First:  elections have consequences for your money.  Remember – the Brits chose to join the EU.  Any reasonable analysis of history would have suggested that it was a terrible idea, but the idea was “fashionable”… and foolish.  That idea of globalism through the EU won the day back in the 90’s, and all of Europe has suffered since.  So folks, VOTE CAREFULLY…

Second:  Immigration isn’t an issue to be taken lightly.  With all Donald Trump’s talk of erecting a wall and freezing immigration of Muslim refugees, faux intellectuals have made it fashionable to make accusations of xenophobia when faced with anyone so “uncouth” as to support immigration limits that are clearly pro-America.  But the truth is different that the fashion, as there’s clear evidence connecting Muslim immigrants to being economic leaches and downright dangerous, as yet again evidenced by the recent accusations that 3 Muslim boys, all 14 or younger, raped a 5-year-old girl with special needs in Idaho earlier this month.  Don’t be swayed by shapeless arguments about “fairness”… your family, and their wellbeing, should ALWAYS be the primary factor you consider.

And Third:  If you’re not yet invested in hard assets – namely real estate – now’s the time.  You have to be smart about it, of course, but look at this:  Paper assets are subject to currency fluctuations, and in the past 3 days alone, the British pound has taken a HUGE BEATING… which means that paper assets – like stocks – are inherently worth LESS because their only value is in being converted to cash, and not because they have actual independent value, like real estate does.  So my friends… do yourself a favor… get serious about owning some high-quality, cash-flow producing real estate!  To that end, watch your email this week for the SDI Alert… I’ll be sending you some information about some REALLY STRONG real estate investment opportunities you’ll not want to miss.

We’re about done for the day, and tomorrow, we’ll return to discussing SOURCES for finding great note investment deals.  But… ah yes… the more astute among you might think:  “Bryan, you just told us that paper assets are subject to currency fluctuations, and now you’re telling us to invest in real estate notes.  That’s a huge conflict!”

Not so fast, my friends!  I’ll address that question rather conclusively and impressively, if I do say so myself, hehehehe, so be sure to join me here on tomorrow’s episode of SDI Radio.  And do you know how you can make sure you don’t miss it?  Just text the word SDIRADIO with no spaces or periods to 33444 and get on the FREE SDI Alerts email list.  That’s also where I’ll be sending info about some great real estate investment opportunities, so sign up now.

Folks, amidst the chaos of Brexit and the political storms that are brewing right here in America, I’d like to leave you with one great piece of fundamental advice, and that is:  Invest wisely today, and live well forever!

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What's a great way to diversify your real estate portfolio so you STILL get great cash flow… but without the headaches or legal risk of having a constant stream of tenants? This may be my favorite type of asset of all, my friends, and I'm going to tell you about it right now. I'm Bryan Ellis. This is Episode #207!

Hello, SDI Nation! Welcome to the podcast of record for savvy self-directed investors like you, where we help you to find, understand and profit from exceptional investment opportunities!

Check my first article for TheStreet.com, a major news website that focuses on stock market investing. It seems they wanted to get some perspective about the real estate world, and they feel that your's truly will bring them a big audience. I'm betting they're correct. Hehehe.

So, the last couple of days have been a bit downcast, I'll admit. The ugly lawsuit going on in Virginia against that landlord who made the unthinkable mistake of demanding background checks… and yesterday's discussion of the harsh reality of the fact that Uncle Sam is not on your side… well… I know that's a mouthful of bitterness to swallow.

But let's return from the land of gloom and doom to focus on what we all love: Investments that are SIMPLE, SAFE and STRONG!

Today I'm going to tell you about my favorite asset class: Real Estate Notes! But let's not bore ourselves with discussions of LTV's and interest rates and principal balances. No way! Rather, I'm going to tell you a story about a wonderful, amazing, magical golden box. Here's the story:

You are visiting Omaha, Nebraska, headquarters of Berkshire Hathaway, the investment firm made famous by super-investor Warren Buffett. You're there for Buffett's annual shareholder meeting. This event, if you've ever been to it, is totally unlike any other shareholder meeting in the world. People come in from all over the world to attend this meeting – very, very smart, well informed and well connected people attend this meeting.

They attend it because they're going to get the chance to hear from the man himself, the Oracle of Omaha… the one man on the planet who is revered as something nearly god-like in the investment world, none other than Mr. Buffett himself. Buffett always uses this meeting to give his impressions of how he's performed at Berkshire Hathaway, and he also talks more broadly about the state of the stock market, the economy, and the world.

When Buffett speak, people listen… and that's why you're there… to learn from THE MAN.

So, much to your delight and surprise, Buffett grabs you by the arm and pulls you into a private room. He says, “Look, I've got a magical box made of pure gold. This box is magical because every month for the next 30 years, it's going to spit out $1,000 cash. It just works automatically, no effort required from you. Plus, the box itself is worth $150,000 just from the gold content. I'd like to sell this box to you for only $100,000. Would you like to buy it?”

So you think it over… and honestly, it's kind of a no-brainer. You get $1,000 per month for 30 years. And the box is worth $50 GRAND more than you've got to pay for it. If that wasn't enough, it's none other than WARREN BUFFETT recommending it to you… and like the box, his reputation is pure gold. So you tell Mr. Buffett: “Yes, I'd like to buy the magical golden box.” Then he looks at you and says “GREAT! But there's one catch: In 30 years from now, I get the box back."

Well, that puts a bit of a curveball in your plans. You were secretly considering just “flipping” this magical golden box to capture as much of the $50,000 profit as you could, but it turns out, that could be difficult since Buffett gets the box back in 30 years from now.

But you put pencil to paper, you do the math, and you realize that it's still a pretty strong deal to get $1,000 per month for 30 years in exchange for $100,000 now. But then, something important occurs to you. So you ask:

“Mr. Buffett, what happens if the box stops working correctly, and doesn't continue to pay me $1,000 per month. What then?”

And with a gleam of pride in his eye, Buffett looks at you and says “NOW you've asked the right question. I promise you on my word that you'll get your $1,000 per month for the next 30 years. But if something happens, and for some reason you DON'T get your monthly payment… THEN, and ONLY THEN, can you sell the box to recoup your investment and lost profits.”

So you noodle the whole thing for a minute… and when you do, what you see is that this deal that Buffett is proposing to you is simple… because in return for investing $100,000 you get $1,000 per month for 30 years. It's safe because if for some reason your money doesn't get paid, you can sell that box, which is worth $50 GRAND more than you paid. And it's strong because – according to my trusty dusty, handy dandy financial calculator, the yield you'd be receiving on your money would be 11.63%... so that's really nice.

That's it… it's a simple, safe and strong deal… it meets that basic criteria that we espouse here at SDI Society.

So why this mythical story about a magical golden box? Because it's really just a story about how real estate notes work. A note is just a financial instrument that entitles it's owner to cash flow – payments from a mortgage. And just like that golden box, if you don't get your payments, you can sell the asset itself – the house – to get your money back.

The opportunity lies in the fact that notes are what's called “negotiable instruments”. In other words, they can be bought and sold.

You could sell the cash flow – the monthly payment stream – to somebody else for what you paid for it, or for more or for less. And if you get your payments as promised, it's all good. If not, you can sell the house attached to the note and get your money back that way.

Same deal with a note. The level of flexibility you have with these things is simply astonishing.

We won't get into the complexities right now, but let me make this clear to you: There's simply no more flexible type of financial instrument than a good real estate note, in my humble but entirely accurate opinion. Hehehehe. The options are astounding… and these instruments can easily be engineered – or even RE-ENGINEERED – to give you PRECISELY the level of simplicity, safety and strength that your portfolio needs.

But how do you find them?

Patience, my friends… patience! I'll cover that in tomorrow's episode. As for now, I have a favor to ask of you: *PLEASE* consider doing me a favor. In case you didn't know, there's now a VIDEO version of this show that's on YouTube. I'd be SO GRATEFUL if you'd visit the youtube page right now for this show – it's at SDIRadio.com/youtube – and PLEASE subscribe to the SDI Society channel there. It's free, it's simple… and I'll be truly grateful to you!

Tomorrow we'll hit the ground running with some tips on FINDING great note investments. You're going to love it. Until then, my friends: Invest wisely today, and live well forever!

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