Private Foundations: A Practical Guide To Tax Savings

Private foundations enjoy tax-exempt status, but they are still subject to unique and sometimes complex tax rules under the Internal Revenue Code (IRC). From filing requirements to avoiding costly penalties, here's a streamlined overview of what private foundations need to know.

Understanding Governance and Deductions

Private foundations are governed by strict rules not applicable to public charities. In addition to normal “fiduciary” duties, they face penalties, often in the form of taxes in these areas:

Contributions to private foundations are tax-deductible but may be subject to limits (typically 30% of adjusted gross income for individuals).

Identifying Unrelated Business Income (UBI)

UBI arises when a foundation earns income from a trade or business that is regularly carried on and not substantially related to its exempt purpose. Passive income (e.g., dividends, royalties) is generally excluded—unless it’s debt-financed.

If UBI exceeds $1,000, the foundation must file Form 990-T. Tax is assessed at standard corporate rates, and estimated taxes may be required if expected liability exceeds $500.

Careful tracking of expenses related to UBI is critical for reducing tax liability. Expenses must be directly tied to the unrelated business and reasonably allocated.

Calculating the Net Investment Income Tax

Private foundations are subject to a 1.39% tax on net investment income. This includes:

Deductions may include necessary expenses incurred to generate or manage investment income. However, previously paid excise taxes cannot be deducted.

Meeting the Annual Distribution Requirement

Nonoperating foundations must distribute at least 5% of their average annual noncharitable-use assets. Qualifying distributions include grants to 501(c)(3) public charities and certain administrative expenses.

Failure to meet the minimum distribution requirement results in a 30% excise tax on undistributed income, with a 100% tax imposed on persistent shortfalls.

Maintaining Expenditure Responsibility

When making grants, especially to foreign or nonqualified organizations, a private foundation must follow IRS expenditure responsibility rules. This includes:

  1. Conducting a pre-grant inquiry.
  2. Establishing a written grant agreement.
  3. Requiring periodic reports from the grantee.
  4. Reporting to the IRS annually via Form 990-PF.
  5. Investigating any misuse of funds.

Failure to comply may result in excise taxes and jeopardize the foundation’s tax-exempt status.

Recognizing Operating Foundations

Unlike nonoperating foundations, operating foundations directly conduct charitable activities. While they share many tax rules with nonoperating foundations, key distinctions include:

Operating foundations are less common and typically more complex to manage.

Avoiding Self-Dealing Pitfalls

Self-dealing rules prevent transactions between the foundation and disqualified persons. Common violations include:

Penalties include a 10% excise tax on the self-dealer and a 5% tax on any foundation manager who knowingly participated. If not corrected, second-tier penalties of up to 200% may apply.

Applying for Tax-Exempt Status and Filing Requirements

To qualify for exemption under IRC Section 501(c)(3), an organization must legally form as a nonprofit corporation or trust and include clauses in its governing documents that support a charitable purpose.

Once established, the foundation must apply to the IRS using Form 1023 or the simplified 1023-EZ. If the application is submitted within 27 months of formation, the organization will be treated as exempt retroactively from its formation date.

Annually, all private foundations—regardless of income or activity—must file IRS Form 990-PF. Failure to file on time can result in daily penalties.

Final Thoughts

Private foundations play a vital role in philanthropy but must navigate a landscape of regulatory requirements and potential tax pitfalls. Understanding these obligations—from filing and reporting to expenditure rules and excise taxes—is essential to maintaining tax-exempt status and fulfilling charitable missions effectively.

Tax, Investing, and Legal Strategies for Medical Professionals

High-earning medical professionals eventually learn a hard lesson:

The more they earn, the more they pay in income taxes.

And since physicians and other medical professionals rank among some of the highest-paid individuals in the United States, they need tax planning and investment strategies that will protect their assets and build real generational wealth they can pass to their children and grandchildren.

Hard-working doctors and other healthcare pros can take advantage of all the tax deductions, tax credits and tax exemptions that Congress and the Internal Revenue Service (IRS) make possible to reduce their taxable income.

But there are also lesser-known strategies which, when leveraged correctly, can reduce your tax burden and deliver a sound financial plan that gives you what we call “time freedom.”

These include:



✅️ Setting up an S-Corporation and a Solo 401(K)
✅️ Setting up a 501(C)3 Non-Profit Private Foundation and investing in cash flow deals 
✅️ Investing your tax savings in Short-Term Rentals or syndication deals that offer bonus depreciation

Here I’ll introduce some of the tax, investing and legal strategies our medical professional clients use.

Tax Strategies for Medical Professionals

As a busy healthcare professional, you work hard to provide quality care to your patients, juggle administrative work, and balance your work with life and demands at home. 

That’s why working to optimize your tax situation is probably not at the top of your priorities.

Deep down, however, you know that tax planning should be a key component of your wealth management strategy.

If you are employed by a hospital, a private practice, or a government healthcare department, you’re probably a W2 worker. W2 employees are taxed on gross income first, meaning the IRS takes their cut before you receive your paycheck.

But if you’re a business owner or investor (with the correct structures in place), you can pay the IRS quarterly on your net income after expenses. 

To put it another way, when investing through a properly structured entity, your investment income gets the same tax treatment as a business. This allows you to use your money before deducting taxes. 

If you’re like most of our clients, you've been told there isn't much you can do to lower your taxes beyond taking deductions or using retirement vehicles like 401ks and IRAs. 

This simply isn’t true.

That’s why finding the right CPA to work with is so crucial. You need someone who knows what they’re talking about. It's important to understand there are different tiers of CPAs:

Many CPAs don’t understand that it's possible to save outside the standard deductions. A high-level CPA is someone who earns a high income themselves, someone who has personally found a way to pay nearly $0 in tax by leveraging advanced strategies. 

The right CPA helps our medical professional clients achieve and maintain tax rates in the 0-10% range. This accelerates your overall cash flow and net worth.

If you find a CPA with an MBA and who can perform Chief Financial Officer functions, even better— these folks will be able to help you navigate complex tax decisions and make it seem easy.

When you work with that level of CPA, you'll start to find creative (but completely legal) ways to save taxes, even if you're a medical professional with zero investment experience. And that savings can be invested in equally creative, equally overlooked ways.

Such as …

Investing Strategies For Medical Professionals

The median wage for medical professionals (everything from dental hygienists, physicians and surgeons, to registered nurses) was $80,820 in 2023—much higher than the median annual wage (for all occupations) of $48,060. (Source)

However, at a certain point these high-salary professionals realize they need to take steps to shelter their income from overtaxation. And while saving money on tax is important, but the real magic happens once our medical professionals start re-investing those tax savings into tax advantaged deals.

These include:

Private Foundations

A Private Foundation is a self-funded nonprofit organization that shelters income, allowing you to bypass traditional capital gains tax and take advantage of a much lower excise tax rate.

When using the Private Foundation for income sheltering and high-performance investments, the compounding effect can lead to much better returns than traditional investing.

The Private Foundation can even  replace your W2 income with a director’s salary for managing the Foundation.

Depreciation Deals

Bonus depreciation is a tax incentive designed to stimulate business investment by allowing investors to accelerate the depreciation of qualifying assets, such as equipment, rather than write them off over the useful life of the asset. This strategy can reduce a company's income tax, which in turn reduces its tax liability.

Medical professionals can claim accelerated bonus depreciation as a limited partner when investing passively into a real estate syndication. As a limited partner (LP) passive investor, you get a share of the returns based on how much you invest. 

Similarly, you get a share of the tax benefits as well, as documented by the Schedule K-1 you would receive each year. The K-1 shows your income for a particular asset. In many cases, particularly in the first year of the investment, that K-1 can show a loss instead of an income.

The magic of the K-1 is that it includes accelerated and bonus depreciation. In other words, even while you’re receiving cash flow distributions, the K-1 can show a paper loss, which in most cases means you can defer or reduce taxes owed on the cash flow you’ve received.

Cash Flow Deals

These deals don't offer tax benefits, but can generate so much income that they outperform potential tax savings. Investments in this category include things like algorithmic trading. You can invest in cash flow deals through a tax shelter, such as your Private Foundation, to get the initial tax savings as well as tax advantaged portfolio growth.

Legal Strategies For Medical Professionals

Estate planning is something everybody needs to do at some point. Lawsuits can happen to anyone, and high-net-worth medical professionals are especially at risk. All it takes is a car accident, an injury on your property, a contractual disagreement—and once somebody knows what you own, they can hire a good attorney to force you to settle out of court. 

The way you protect yourself is to set up asset protection. Holding companies can shield anything of value, such as real estate properties and investments. Operating companies can be established for  business activities like collecting rent, paying contractors, and signing contracts.

Trusts are a way to guarantee anonymity across all of your entities and assets. They allow you to look like a beggar on paper and transfer your assets anonymously to your heirs, taking the target off your back.

Here are a couple of other legal structures we help our clients set up:

S Corporations

Independent doctors or physicians can create S Corporations to handle their taxes. Unlike regular corporations (where profits get taxed twice), S corporations pass their income, losses, and deductions directly to their owners. An S Corp, or S corporation, is a “pass-through” entity, which means that the profits and losses of the business are passed through to the individual owners and are taxed at the owners’ personal income tax rates. 

Instead of paying corporate taxes, each owner reports their share of the business’s money on their personal tax returns, paying taxes at their individual rates.

Solo 401(K)

What about retirement?

If you are a medical practitioner who works as an independent contractor, The Solo 401(k) is an ideal retirement plan because it lowers your taxable income and enables you to build up retirement funds through high contribution limits and almost limitless investment capability. 

The Solo 401(k) is a qualified retirement plan, just like hospital-sponsored plans. You can contribute to the plan on a tax-deferred basis. You can also contribute Roth funds to the plan and invest tax-free. With some of the highest contribution limits, the Solo 401(K) lets medical professionals lower their taxable income and grow their retirement quickly. 

To Wrap It Up …

Even medical professionals with no investments need entity structuring. Here is what a full legal diagram could look like, which includes asset protection structures, estate planning, and tax shelters.

As you accelerate your tax and investing approach, it's important to add in measures to prevent a catastrophic reset. We can show you how to save $20k or more in taxes during the first year, but you will want to set up additional tax and legal structures over time to continue to reduce your taxes down to the 0-10% range. 

Without entities, this would be impossible.

It's also important to protect yourself from catastrophic events, no matter how unlikely, so that you don't have any major setbacks on your journey to time and financial freedom.

Tax, Investing, and Legal Strategies for Tech Professionals

Tech industry professionals thrive on innovation, cutting-edge technology, and rapid growth.

However, navigating the world of personal finance requires a different set of skills. 

Whether they're W2 employees or entrepreneurs, experienced tech professionals can earn lucrative compensation packages, which unfortunately means significant tax liabilities. That’s why they have to optimize tax strategies and get professional help navigating complex tax laws. 

Or if they own a business or have exited a business, our capital gains page can help (if they made a ton of money in their exit and are looking for tax strategies to offset that).

The unique financial challenges faced by tech workers call for tailored tax, investing and legal strategies to help you make the most of your wealth. These include:


✅️ Investing in cash flow deals (like algorithmic trading).
✅️ Creating a 501(C)3 Non-Profit Private Foundation to shelter up to 30% of your income
✅️ Setting up an S-Corporation for any side gigs and leverage the Augusta Rule

Navigating the world of taxes can be daunting, especially for tech workers with complex compensation packages, stock options, and freelance gigs. With the right strategies, however, you can make an informed decision about the best steps to take to secure your financial future.

Let’s get started.

Tax Planning for Tech Professionals

Equity compensation, a high income, remote work (where your employer is in another state with different laws) … These can make tax planning for tech professionals quite complex.

You have to take a lot into account.

Different types of equity compensation have different tax treatments. For example, Restricted Stock Units (RSUs) are taxed as ordinary income upon vesting. Incentive Stock Options (ISOs) may qualify for preferential tax treatment if certain holding periods are met. Non-Qualified Stock Options (NSOs) are taxed as ordinary income upon exercise. But exercising ISOs can trigger Alternative Minimum Tax (AMT) liability.

Lost yet? It can get pretty confusing very quickly.

I believe a solid wealth management strategy starts with tax planning. Remember: salaried (full-time) tech workers are taxed on gross income first, with the IRS taking their cut before you receive your paycheck.

Compare this to business owners and investors (with the correct structures in place), who pay the IRS quarterly on their net income after expenses. 

When you (as a full-time employee) invest through a properly structured entity, your investment income gets the same tax treatment as a business. This allows you to use your money before deducting taxes. 

Tech professionals early in their careers may benefit from Roth conversion strategies, paying taxes now on traditional retirement accounts to enjoy tax-free growth and withdrawals in the future. This isn't nearly as strong as the foundation or depreciation deals, however.

But if you’re like most of our clients, you’re further along in your career, making a good salary, and you've been told there isn't much you can do to lower your taxes beyond taking deductions or using retirement vehicles like 401ks and IRAs. 

High earners in the tech field spend years growing their career and growing their income. The more they make, the more it hurts to see 20-30% of earnings yanked away by the IRS.

I have good news for you: The right CPA can show you how to layer tax strategies to dramatically cut your taxes and even reach the 0-10% range, depending on how aggressive you decide to go.

(Here's the catch: To achieve 0-10%, you actually have to implement all the tax strategies. That's like eating your veggies, nobody wants to do it.)

Many CPAs don’t understand that it's possible to save outside the standard deductions. Things like tax-loss harvesting can offset gains and reduce tax liability. Charitable giving or even setting up a private nonprofit foundation can also help.

A high-level CPA will be able to help you navigate complex tax decisions and make it seem easy. They can find creative (but completely legal) ways to save taxes. And that savings can be invested in equally creative, equally overlooked ways.

Such as …

Investing Strategies For Tech Professionals

After implementing all the best tax strategies, our tech clients then focus on investing their tax savings into tax-advantaged deals. There are tons of deal types, but there are two categories of investments you really need to know about:

Tech pros need to know about e three "financial freedom" strategies they can avail themself of:

The first two are short-term strategies. You can save taxes with Royal Legal's tax strategies (and you may still use a foundation, but only as one of many tools to capture tax savings) and you can generate cash flow with something like algorithmic trading.

Creating a nest egg requires a longer-term strategy. Putting money into your own foundation, THEN investing in cash flow deals is the strongest possible move—as long as you don't want to have a bunch of cash on hand. Because once it's in the Foundation, it's no longer yours. We endorse this strategy because that's the best possible move for anybody interested in achieving financial freedom.

Legal Strategies For Tech Professionals

Software executives, Saas founders, and other tech professionals have giant targets on their back when it comes to frivolous lawsuits.

All it takes is a car accident, an injury on your property, or a contractual disagreement—and once somebody knows what you own, they can hire a good attorney to pressure you until you settle out of court. 

The way you prevent this is to set up asset protection before you get sued.

Anonymity across all of your entities and assets is key. Holding companies are where you should place your assets. This could be things like real estate properties or other investments. Anything of value that could be exposed during a lawsuit is important to protect. Operating companies run everything.

So here's what you'll be doing:

#1. Set Up a Holding Company

This is what "holds assets," typically anonymously. There are three kinds:

#3. Set Up an Operating Company

This is what does your "operations." Collecting rent, paying bills, performing key functions and transactions. This is what turns into the S-Corp because the money is flowing through (but not held inside for very long) this entity, which allows us to apply tax strategies to it.

In this case, you are mixing both. So you would want to differentiate…

Entity structuring means creating LLCs so your assets are held anonymously and separate from your high risk business transactions. We recommend a holding company for any investments or assets. Then a separate operating company for business transactions, such as your consulting side gig. When the operating company reaches $75k/year income, you should turn it into an S-Corp. etc…

PS - The $75k range (sometimes as low as $50k) is basically where you start to save money on taxes.

The reason it takes until then is that the S-Corporation requires a separate tax return and payroll, which both cost money in the $1-2k range. So it doesn't really pay for itself until a certain income threshold.

Unlike C Corps (that face corporate taxes and then shareholder taxes on dividends), S Corps allow shareholders to pay taxes only at their individual income tax rates, simplifying the process. S Corps split profits into wages and distributive shares, the latter of which is not subject to self-employment taxes. This distinction can provide considerable savings on the Social Security and Medicare tax burden.

We’ll also help you employ different types of trusts to create anonymity at the County Recorder and Secretary of State offices, as well as during probate (so you look like a beggar on paper and can transfer your assets anonymously to your heirs).

My team can show you how to save $20k or more in taxes during the first year, and additional tax and legal structures will  continue to reduce your taxes down to the 0-10% range. Without entities, this would be impossible.

Here’s a 20-year forecast that shows how the right combination of tax strategies, investing and corporate entity structure can grow your wealth:

Protect yourself from lawsuits with estate planning, no matter how unlikely you think they are, so that you don't have any major setbacks on your journey to time and financial freedom.

The Path From High Tech To Financial Freedom

You’ve worked hard your entire life. It’s time to gain control over your time and money. Rapidly achieving true freedom requires a good tax and investment strategy.

We help tech executives and other professionals in the digital space save $20k or more in taxes during the first year—then re-invest that tax savings into turnkey properties, ATMs, self-storage syndications, apartment complex rehabs and more. We help them create the right tax and legal structures to continue to reduce your taxes and create true anonymity to protect their money.

In the end, we can help you:

Tax, Investing, and Legal Strategies for W2 Employees

Not-so-fun fact: As a W2 employee, you are taxed at a rate higher than businesses and investors.

In fact, no group in America pays more taxes than high-salary wage-earning W2 employees. 

Whether you are a medical professional, a tech professional or any other full-time employee for a U.S. company, there are some little-known ways you can jumpstart your tax savings and investment journey.

They include:


✅️ Setting up a 501(C)3 nonprofit Private Foundation and invest in high-performance depreciation and cash flow deals
✅️ Finding general partner investment opportunities in energy and machinery to get bonus depreciation
✅️ Investing in Short-Term Rentals and using Cost Segregation and the STR Loophole

Let’s take a look at these tax, investing and legal strategies for 9-to-5’ers so you can make an informed decision about the best steps to take to secure your financial future.

Tax Strategies for W2 Employees

Tax planning is a key component of a solid wealth management strategy. Remember: W2 employees are taxed on gross income first, with the IRS taking a portion before you receive your paycheck.

In contrast, business owners and investors (with the correct structures in place) pay the IRS quarterly on their net income after expenses. 

When you (as a full-time employee) invest through a properly structured entity, your investment income gets the same tax treatment as a business. This allows you to use your money before deducting taxes. 

If you’re like most of our clients, you've been told there isn't much you can do to lower your taxes beyond taking deductions or using retirement vehicles like 401ks and IRAs. That’s why finding the right CPA to work with is so crucial. You need someone who knows what they’re talking about.

The right CPA can help W2 earners leverage tax strategies to achieve and maintain tax rates in the 0-10% range. This accelerates your overall cash flow and net worth.

Many CPAs don’t understand that it's possible to save outside the standard deductions. A high-level CPA is someone who earns a high income themselves, someone who has personally found a way to pay nearly $0 in tax by leveraging advanced strategies. 

If you find a CPA with an MBA and who can perform Chief Financial Officer functions, even better— these folks will be able to help you navigate complex tax decisions and make it seem easy.

When you work with that level of CPA, you'll start to find creative (but completely legal) ways to save taxes. And that savings can be invested in equally creative, equally overlooked ways.

Such as …

Investing Strategies For W2 Employees

W2 employees spend years growing their career and growing their income. At a certain point we have plenty of income but 20-30 percent of it is being sucked away by the IRS.

Saving money on tax is important, but the real magic happens once W2 earners invest their tax savings into tax-advantaged deals.

There are tons of deal types, but the top asset classes include real estate, syndications in energy or machinery, and algorithmic trading. In short, deals can do three things:

In general, there are two categories of investments you should be looking at...

Depreciation Deals

Cash Flow Deals

These deals don't offer tax benefits, but can drive so much income that they outperform the tax savings. Investments in this category include things like:

One of the top strategies is to invest in cash flow deals through a tax shelter, such as a 501(C)3 Non-Profit Private Foundation, to get the initial tax savings as well as tax advantaged portfolio growth.

You see, there are three "financial freedom" strategies at a high level:

  1. Save on taxes (typically this year)
  2. Generate more cash flow (typically this year)
  3. Create a nest egg so you can retire as fast as possible

#1 and #2 are short-term strategies. You can accomplish #1 with Royal Legal's tax strategies (and you may still use a foundation, but only as one of many tools to capture tax savings) and you can accomplish #2 with a good cash flow deal (algorithmic trading, for example).

#3 is a longer-term strategy. Putting money into your own foundation, THEN investing in cash flow deals is the strongest possible move—as long as you don't want to have a bunch of cash on hand. Because once it's in the Foundation, it's no longer yours.

So when we endorse this strategy, it's because that's the best possible move for anybody interested in #3 - achieving financial freedom.

Legal Strategies For W2 Employees

As you accelerate your tax and investment approach, it's important to incorporate asset protection and legal strategies into your plan. The Royal Legal approach for W2 earners lets you:

Even a W2 employee with no investments needs to set up legal support. Everybody needs an estate plan, not just for their kids but also in case they become incapacitated and need someone to help make medical and financial decisions (ex: car accident, COVID, etc...).

Setting up an LLC, even as a small consulting or investing firm, can give you options to a big range of new strategies.

Once your LLC hits the $50-75k income mark, the S-Corp election becomes your best friend.  S Corps utilize pass-through taxation, meaning income and losses "pass through" the company directly to the shareholders. 

Unlike C Corps (which have corporate taxes and then shareholder taxes on dividends), S Corps allow shareholders to pay taxes only at their individual income tax rates, simplifying the process.

For businesses generating between $75,000 and $250,000 in profits per owner, electing S-Corp status can offer significant savings. While LLCs face self-employment taxes on all profits, S-Corps split profits into wages and distributive shares, the latter of which is not subject to self-employment taxes. This distinction can provide considerable savings on the Social Security and Medicare tax burden.

The S Corps elections also means you can write off business expenses such as equipment, work meals, travel and more. For example, you can depreciate vehicles—80% if under 6,000 lbs or 100% if over 6,000 lbs.

You can even pay your kids to work, typically up to around $14k/year. They avoid income tax and you avoid having profit taxed at your normal income tax rate. Win/win!

There’s a Path to True Financial Freedom For W2 Employees

You’ve worked hard your entire life. It’s time to gain control over your time and money. Rapidly achieving true freedom requires a good tax and investment strategy.

We can show full-time, W2 workers how to save $20k or more in taxes during the first year. Then we give you access to high performance deals and model out different investment options so you can see the best path to rapidly achieve your financial goals.

The Private Foundation. Oil & gas syndications. Machinery deals. And short-term rentals. These are your best options as a W2. The list of deals that outperform traditional stock market investments (and sometimes provide additional tax benefits) is long.

Take a look at a typical 20-year plan that includes asset protection structures, estate planning, investing and tax shelters:

Market Predictors to Identify Opportunity

Uncover the secret to successful investing in a dynamic and unpredictable economy. Dive into the world of demographics, analyzing job growth and zoning regulations. 

Find the strategy that brings excellent ROI and opens doors for first-time home buyers priced out of the market. Get ready to embark on a lucrative journey!

Watch: Market Predictors to Identify Opportunity with Charles Bulthuis

Housing Demand and Supply-Side Conditions

Understanding the balance between housing demand and supply is essential. If there's a shortage of single-family homes, this could drive up prices, creating a seller's market. Conversely, an oversupply may lead to a price drop, favoring buyers.

First-time homebuyers are currently facing significant challenges in the housing market because of the following:

How Can Real Estate Investors Benefit?

These challenges present several unique opportunities for real estate investors:

While these opportunities can provide potential profits, investors must conduct thorough research and due diligence before investing.

Population growth

Population growth has a substantial impact on the real estate market, influencing both demand and pricing. 

Increased Demand for Housing

As the population increases, the demand for housing also grows. This demand can lead to more construction projects and increased sales in the real estate market.

Changes in Home Prices

The balance between supply and demand dramatically influences home prices. A growing population can increase demand, pushing prices up, especially if the housing supply cannot keep pace.

Shifts in Demographics

Population growth doesn't just refer to numbers; it also involves shifts in demographics such as age, income, and regional preferences, which can impact the types of properties in demand. For instance, an increase in the young adult population might boost demand for rental properties or starter homes.

Impact on Commercial Real Estate

Commercial real estate can have a positive impact in areas where population growth rates are significantly above average, as more residents require services, retail outlets, and office spaces.

Age Distribution

Age distribution plays a significant role in shaping the real estate market, and different age groups have varying housing preferences. 

Changes in Housing Preferences

Millennials may prefer rentals or smaller starter homes in urban areas, while older generations may opt for larger homes in suburban areas. As the demographic makeup of the population changes, these preferences can shift, impacting the demand for different properties.

Impact on Supply and Demand

An aging population can create sustained demand for certain housing types, reducing home prices and excess housing supply at a minimum. However, if a large portion of the population is moving into retirement and downsizing, this could lead to an increased supply of larger, more expensive homes on the market.

Effect on Secondary Cities and Alternative Living

An aging population may cause increased migration to secondary cities, where the housing stock might not be sufficient. Older people might seek alternative living arrangements, such as assisted living facilities or retirement communities, influencing the demand for these properties.

Migration Patterns

Migration patterns can influence housing demand. Understanding migration patterns is crucial for real estate investors as it helps predict changes in demand and identify potential growth areas.

Demand and Supply

Whether intercity, interstate, or international, migration directly affects the demand for residential and commercial real estate. Influxes of people into an area can increase demand, potentially leading to a rise in property prices if supply cannot keep pace. Conversely, regions experiencing outmigration may see decreased demand and potentially lower property values.

Shift in Property Types

Depending on the demographic of the migrants, different types of properties might be in demand. For example, young professionals may prefer urban apartments near workplaces and amenities, while families might look for single-family homes in suburban areas with good schools.

Affordability and Lifestyle

Many people migrated during the pandemic due to the opportunity to work remotely, the desire for more space, and better affordability. These factors can cause shifts in real estate markets, with increased demand in more affordable regions or properties offering more space.

Key Takeaways

Bad Beat and Best Deals in Note Investing

Investing in real estate notes can generate income without direct property management. Instead, investors earn interest on the loan. However, it carries risks, such as borrower default. Before investing in real estate notes, thorough due diligence is crucial for potential investors.

Watch Episode 60: Bad Beat and Best Deals in Note Investing with Paige Panzarello

Discover the fascinating world of note investing! Dive into the captivating presentation above and the informative blog below, where we unravel the intricacies and nuances of this exciting investment strategy. Get ready to unlock new insights and opportunities in note investing!

Discover The Magic Of Notes!

In real estate investing, a note, or promissory note, is a financial instrument that documents a property purchase loan. It's a written promise from the borrower to repay a specific amount to the lender under agreed terms.

Key features of notes in real estate investing:

  1. Principal and Interest: The note specifies the loan amount, including the original principal and the interest rate. The interest can be fixed or variable, based on the agreement.
  2. Repayment Schedule: Outlines the repayment schedule, specifying payment due dates and amounts. Repayment can be monthly, quarterly, or agreed upon by all parties.
  3. Term: The note's term is the duration for loan repayment, ranging from months to years.
  4. Default Provisions: The note also includes provisions for borrower default, which may lead to foreclosure and the lender taking ownership of the property to recover their investment.
  5. Collateral: In real estate investing, the purchased property is collateral for the loan. If the borrower defaults, the lender can seize and sell the property to recover funds.

Unleash Your Inner Financial Power: Becoming The Bank

Becoming the bank with notes investing means buying mortgage notes and taking on the role of the lender. Instead of owning the property, you invest in debt or loans where the borrower owes you money.

Here are the steps to become the bank with notes investing:

  1. Educate Yourself: Before you start note investing, it's crucial to understand the basics. Familiarize yourself with terms like performing vs. non-performing notes, first vs. second liens, and the foreclosure process.
  2. Find Notes to Buy: You can buy real estate notes from banks, hedge funds, brokers, or other investors. Online platforms and marketplaces also exist for finding notes for sale.
  3. Due Diligence: Just like in property investing, thorough research is crucial. Assess the borrower's payment history, property condition, value, and loan terms. Also, verify all legal documentation.
  4. Purchase the Note: After researching and selecting a note to invest in, you can proceed. The transaction process usually involves a purchase agreement and the transfer of notes and mortgage documents.
  5. Manage the Investment: You take on the bank's role after purchasing the note. For performing notes, you'll receive monthly payments from the borrower. For non-performing notes, you may need to work with the borrower to resume payments or go through the foreclosure process.
  6. Exit Strategy: Depending on the outcome, note investors can profit by receiving loan payments, selling the note for a profit, or acquiring and selling the property in case of foreclosure

Explore the World of Investment: Uncover the Diverse Spectrum of Notes

There are several types of real estate notes that you can invest in, each with its level of risk and potential return. Here are a few:

  1. Performing Notes: These loans require regular borrower payments as agreed in the loan terms. Investing in performing notes yields a steady income stream from loan interest.
  2. Non-Performing Notes: These are loans where the borrower has stopped paying. You can buy non-performing notes at a discount. As an investor, you can profit by helping the borrower, restructuring the loan, or foreclosing and selling the property.
  3. Seller-Financed Notes: Owner-financed notes occur when the property seller finances the buyer's purchase. The buyer then pays directly to the seller or the investor who purchases the note.
  4. Junior Lien Notes: These are secondary mortgages on a property. Junior lien notes can offer high returns but come with higher risk as they are subordinate to senior liens. In foreclosure, senior liens get paid first.
  5. Reperforming Notes: Previously non-performing loans are current, making them attractive to investors. They are often sold at a lower price than performing notes yet carry less risk than non-performing ones.
  6. First Lien Notes: Primary mortgages are paid first in the event of property foreclosure, prioritizing the first lien holder over other lien holders.
  7. Commercial Real Estate Notes: These are for commercial properties such as offices, retail spaces, or apartment complexes. Commercial real estate notes can yield higher returns than residential notes but require expertise for effective management.

Key Takeaways

Investing in notes is an excellent strategy to diversify your portfolio. It generates income without property ownership challenges, like maintenance, tenants, or property taxes.

As a note investor, you earn returns from loan interest, generating passive income. Note investing offers a range of risks and rewards, from the safety of performing notes to the high-return potential of non-performing or junior lien notes. Tailor your investment approach to match your risk tolerance and financial goals. Note investing can also mitigate portfolio risk as it is less correlated with the stock market, providing a buffer during market volatility.

Note investing provides ample opportunities for diversification within the asset class. Investors have many investment options like residential and commercial notes, first and junior liens, and reperforming notes.

Are you interested in note investing? Want to make informed investment decisions? Join us in Royal Investing Group Mentoring. Learn from the best, network with investors, and fuel your journey to financial empowerment. 

Don't miss out! Click here to register for our upcoming session.

Syndication to Grow Wealth

Are you looking for an investment opportunity that offers passive income, potential for asset appreciation, tax advantages, and diversification? If you said yes, you should learn how to grow wealth with syndication.

Syndication is a method where multiple investors come together to fund a project or venture that would be too expensive or risky for an individual investor. The group of investors is the syndicate.

The investments could range from real estate projects to corporate bonds, startups, TV shows, and real estate. Each syndicate member contributes a portion of the required capital, reducing the financial burden on any single investor.

Watch Syndication to Grow Wealth with Hicham Hajhamou as an additional resource. 

Grow Wealth With Syndication

You grow wealth with syndication in a variety of ways. From having control of your money to diversification, keep reading for more information about the characteristics and advantages that syndication offers you.

Control

Syndication differs from other investment vehicles like mutual funds or stocks: In a syndicate, 

investors have:

Passive Cash Flow

Once the project generates revenue, you will receive a share of the profits proportional to your initial investment. You earn income without managing or operating the investment yourself actively.

Asset Appreciation

Syndication leads to asset appreciation. Over time, the value of the project or venture may increase, leading to a higher return when the asset is sold or refinanced. For instance, if the syndicate invests in a real estate project, property improvements or market changes could increase the property value over time.

Tax Advantages

Syndication also offers tax advantages. In many cases, the costs associated with the investment, such as interest on loans or depreciation on real estate, are deductible from the income generated by the syndicate. You reduce your overall tax liability.

Diversification

Investing in a syndicate diversifies your portfolio. You reduce risk and increase potential returns by spreading your investments across different projects and asset classes.

Have more questions about how to grow wealth with syndication? Check out our blog posts for more detailed and granular information:

Syndication: Due Diligence And Mentors

Embarking on the syndication investment path is an exciting venture that yields significant financial rewards. However, it is crucial to approach this journey with due diligence and the guidance of a mentor for optimal success.

Due Diligence

Due diligence is the comprehensive appraisal of a business or person before signing a contract or entering an agreement. For instance, if you are considering investing in a real estate syndication, your due diligence might involve evaluating the property and its:

You also will want to understand the syndicate manager's experience and strategy for managing and eventually exiting the investment.

Mentors

Having a mentor is equally important. A mentor with experience in syndication investments provides invaluable advice, shares their experiences, and guides you through complex situations. 

They help you:

Find a suitable mentor through networking events, industry associations, or even social media groups related to syndication investments. 

Unique Assets To Grow Wealth With Syndication

Investing in syndication offers access to various alternative asset classes, each with unique characteristics, risks, and rewards.

Self-Storage Facilities

These are becoming increasingly popular as an investment due to their lower operational costs and resilience during economic downturns. However, the success of a self-storage facility heavily depends on its location and local demand. Due diligence should include analyzing the local market, competition, occupancy rates, and potential for rent increases.

Mobile Home Parks

These offer steady cash flow and lower maintenance costs, as tenants often own the homes and rent the land. However, specific laws and regulations make managing these parks complex. When conducting due diligence, consider location, occupancy rates, turnover, and local laws.

Multifamily Properties

These are residential buildings with multiple housing units, such as apartments or condominiums. They offer stable income due to the high demand for housing but require effective management and maintenance. The key factors are location, property condition, vacancy rates, and rental income potential.

Office Buildings

These properties are lucrative, especially in high-demand areas. However, they’re risky, particularly during economic uncertainty when businesses may downsize or close. Due diligence should involve assessing the local commercial real estate market, current tenant leases, and potential for rent increases.

Land

Investing in raw land involves purchasing a plot to sell at a profit or develop later. While it has a high potential for returns, it carries significant risks, including zoning issues and market fluctuations. Due diligence should involve a thorough analysis of local zoning laws, market demand, and development potential.

Key Takeaways

Syndication investments present a unique opportunity to enter the realm of real estate and other alternative asset classes, offering the potential for significant returns:

Join us for FREE Royal Investing Group Mentoring to change the trajectory of your investment journey. Take advantage of this opportunity to gain valuable insights from experts and transform your financial future.

Syndication: PPM Creation Tool

So you're ready to invest in real estate syndications. This type of investing is complex, with many different factors at play that are outlined through PPM documentation. Tools that make the process easier are invaluable, as with any complicated investment.

Stephen Slawinski shows the power of a PPM creation tool in Episode #64 of Royal Investing Group Mentoring. Watch the detailed walkthrough here!

In this blog, we curated the critical information that you should have available as you start your investing adventure.

Private Placement Memorandum (PPM) Deal Structures

Several different types of PPM deal structures exist.

Identified Deal

An identified deal is a PPM deal structure where the investor knows what and where they are investing:

Non-Specified Fund

A non-specified fund is a PPM deal structure where the investor does not know what they are investing in but instead invests in a pool of assets managed by an investment firm:

Semi-Specified Fund

A semi-specified fund is similar to a non-specified fund but with more transparency:

Feeder Fund

A feeder fund is a PPM deal structure where one or more funds "feed" into another larger fund that then invests those funds into various assets on behalf of the investors:

Opportunity Zone

An opportunity zone is a PPM deal structure that allows investors to defer paying taxes on capital gains until 2026 if they invest those gains into certain designated areas as defined by the US Treasury Department's Opportunity Zones program.

Issuer's Information (PPM)

The section of the issuer's information provides prospective investors with detailed information about the offering, including the terms and conditions of the security offered, any risks associated with investing in it, and other vital details.

When you provide information about this section, you'll also need to consider the following:

What's The Management Entity In A PPM?

A management entity is any individual or group assigned to manage a project. In real estate syndications, this could include:

The management entity is responsible for the following:

Sponsor's Information

A real estate sponsor has experience structuring and raising funds for a deal. The sponsor also plays a significant role in decision-making throughout the life of the syndication.

Typical Fees Outlined In a PPM

In this section, you'll determine the type, amount, and timeline of fees. Fees may be a way for you to generate income from your investment in syndication. 

Standard fees include the following:

PPM Offering Information

In this section, you'll determine whether you'll have a 506(b) or 506(c):

Accredited Investors

An accredited investor is an entity allowed to trade securities unregistered with financial authorities:

Accredited investors include banks, financial institutions, and other large corporations with access to complex, high-risk investments.

What is a True Up Provision?

A True Up Provision is an accounting adjustment that reconciles two or more balances, often with the help of an adjustment. It also involves adjusting purchase prices based on changes in value since the closing date of a transaction.

It is usually made at the end of a fiscal year or after a transaction has closed. Accountants will review all relevant financial information and make necessary adjustments to ensure accurate records.

Key Takeaways

When investing in a real estate syndication, there are many considerations. It's mountains of information and documentation, and Slawinski's syndication PPM Creation Tool guides you through the process.

If you have questions about syndication real estate investing or general questions about real estate investing, join us in Royal Investing Group Mentoring. It's free and contains valuable information to help you navigate your real estate investing journey.

RV Park Investing Boom

RV park investing has become increasingly popular among real estate investors. RV parks offer an excellent opportunity to diversify your portfolio and maximize profits. 

Paul Moore, Founder and Managing Partner of Wellings Capital, presented during the Royal Investing Summit explaining RV Investing and the lucrative lessons we can learn from the investment strategies of Warren Buffet, Sam Zell, and Blackstone.   

In this article, we'll explore why investing in RV parks is profitable for real estate investors.

RVs and RV Park Trends

RV park investing may be a solid addition to your portfolio because of the rising popularity of RVs. For instance: 

RVs are becoming increasingly popular due to the freedom and flexibility they offer. With an RV, you can explore new places, enjoy the great outdoors, and have home comforts wherever you go.

According to the Go RVing RV Owner Demographic Profile, Millennials are particularly drawn to RVs as they provide an affordable way to travel while still having access to modern amenities such as Wi-Fi (suitable for remote working) and air conditioning. Additionally, with peer-to-peer rental services on the rise, more people are discovering how convenient it is to rent an RV for their next adventure.

Why Invest In RV Parks and Manufactured Housing Communities?

RV parks have distinct advantages for an investor, including the following: 

Mobile home park investing is an attractive option for real estate investors because of the following reasons: 

Surprise Factors For RV Growth

One surprise factor for RV growth is remote work. Living in an RV and remote working is becoming increasingly popular as more people seek the freedom to travel and work simultaneously. With the right resources, finding remote and freelance work while living in an RV is possible. 

Another surprising factor for RV growth is the proliferation of AirBnB, Uber, and other types of sharing economies. Two new websites make RVs more accessible to people: 

What Are The Types Of RV Parks For Investing?

There are four types of RV Parks: 

  1. Overnight and campground parks
  2. Extended stay
  3. Workforce housing
  4. Destination parks

Overnight And Campground RV Parks

This type of RV park is for travelers on the move: 

Extended Stay RV Parks

An extended stay park is for semi-permanent placement of an RV: 

Workforce Housing RV Parks

This type of RV park is a bit more obscure and less common: 

Destination RV Park

A destination RV park caters to the population that visits RV parks for vacation: 

There are significant value adds and abilities to enhance revenue by using: 

Destination parks carry major capital expenses and need staff. Thus it has significant barriers to entry and some risks associated with it. 

Key Takeaways

The number of people looking for ways to explore the outdoors and enjoy nature while still having access to modern amenities drives RVs and RV park growth. The proliferation of remote work and the impact of the housing crisis contributes to the popularity of RVs as well.  

RV park investing can be a great way to capitalize on this trend, as it provides an opportunity to offer a unique experience that combines the best of both worlds. With more people wanting to escape their everyday lives and explore the great outdoors, RV parks are becoming increasingly popular and can be a profitable investment.

Are you looking to invest in RV parks or have other questions about real estate investing? Join Royal Investing group mentoring to receive expert advice and strategies to help you navigate your real estate investing journey.  

AI In Assisted Living Facilities

This article will discuss AI in assisted living facilities and its impact. AI is rapidly becoming a part of life. It's becoming more intelligent and impacting many aspects of society and business.

Ron Galloway, researcher, author, and speaker, discusses disruptive technology and its ramifications for assisted living facilities. Watch the presentation about the emerging possibility of AI in assisted living facilities. 

What Is Artificial Intelligence?

Artificial intelligence (AI) is simulated human intelligence processes by machines. Currently, AI most often refers to computer systems that simulate human intelligence. 

Some examples of AI that we interact with regularly include:

AI has some exciting and controversial buzz because it's becoming more sophisticated and may be approaching "sentience."

What Is AI Sentience?

Sentient means being conscious or having the ability to experience what is happening to itself. For AI to become sentient, it must be virtually identical to human intelligence. That means AI would be able to perform tasks better than humans and appear to understand the human experience.

How Does AI Become Sentient?

AI is becoming sentient because of its computing power and ability to learn from text, images, and other media types. AI can be trained to react using natural language and may learn to think, perceive, understand, and feel instead of just language and output.

Why Is AI Getting So Smart So Fast?

AI may be getting smart fast because it understands images. Images on the internet are readily available and pumped into AI, helping AI learn. 

Investing in Assisted Living Facilities

The conversation about AI and assisted living facilities is essential in the context of investing in those types of facilities.

We are on the precipice of a silver wave as baby boomers age into residential assisted living facilities. The reality is that people will need a place to stay as they age. In addition, modern medicine is improving the quantity and quality of life for people, so they will need to have somewhere to stay for longer. 

Read our articles:

It’s critical to learn more about the advantages of these types of properties and how they might benefit you as a real estate investor.

Why Does AI Matter For Assisted Living Facilities?

AI matters for assisted living facilities because it collects data and makes predictions. For instance, a senior citizen may wear an Apple Watch or Fitbit, which collects data about the senior. 

The watch collects height, weight, blood pressure, and heartbeat data. Using that data and comparing it to data that it has available enables AI to predict or diagnose a potential problem–like a heart attack or stroke before it occurs. That helps assisted living facilities to be proactive with their care towards residents. 

Other applications of AI in an assisted living facility include:

The more data that an AI collects, the more the AI can learn and create sophisticated responses. It gets smarter. 

How Does AI Affect The Lives Of Seniors?

AI has the potential to learn about specific communities. That means it will collect data on the following: 

With that data, it will be able to curate experiences and living conditions that are unique and specific to each community. The ability to curate experiences will improve quality of life and has the potential to make data-driven decisions that will cut costs and prevent superfluous waste of resources. 

Some other things that AI might be able to do include, but are not limited to, helping seniors: 

What Are The Biggest Issues AI Can Solve In An Assisted Living Facility? 

There are two significant issues that AI can counteract in assisted living facilities: 

  1. Loneliness
  2. Increasing creativity

AI can counteract loneliness by having it talk to you in a voice that you find comfortable. For instance, AI can read a book in a loved one's voice. 

One thing that hurts people as they age is the lack of creativity. AI can bolster senior creativity with its ability to augment its natural knowledge or synthesize inputs to create something new. 

Key Takeaways

AI is here to stay and will increase its presence in our lives. The ability to harness and use AI in unconventional and creative ways may define how we progress as a society. 

Although it's not as flashy as self-driving cars, the application of AI in assisted living facilities is essential. AI has the potential to improve the lives of seniors in those types of communities by: 

Do you have questions about assisted living facilities? If so, join us at our weekly Royal Investing Group Mentoring, where we discuss best practices, investment opportunities and facilitate a space for networking with like-minded people. 

Turn Active Income into Passive Income

If there was a guaranteed way for you to be financially liberated, would you do it? 

If you answered yes, you're in luck. Watch Russ Morgan, Partner at Wealth Without Wall Street, share his expertise about attaining financial freedom at a recent RLS summit presentation titled Turn Active Income Into Passive Income. 

The formula for attaining financial freedom by turning active income into passive income is simple: Financial Freedom = Passive income > Expenses. As always, the devil is in the details. In this article, we'll go over Morgan's expert advice and best practices to help you on your way as you turn your active income into passive income and become the master of your financial future. 

Step 1: Turn Active Income Into Passive Income With An Income Account

Establish an income account separate from your business account and personal checking account. 

An income account is an accounting entry that tracks revenue generated. This account is typically part of your company's current assets. It's divided into rent, services rendered, investments, and interest earned.

The income account also tracks the amount of money coming into the business. It records any discrepancies between expenses and revenues. You can use this information to measure your overall performance and decide how best to manage your finances. It is also a key component of financial forecasting and budgeting. 

Step 2: Using A Life Insurance Line Of Credit 

A life insurance line of credit (LILOC) is a financial product that combines the convenience of a revolving loan with the death benefit of an insurance policy. It allows you to borrow against the death benefit of your life insurance policy, up to a certain percentage of its face value, and repay it over time as long as you meet the terms and conditions of your lender.

The life insurance policy and death benefit typically secure the loan, making it an attractive borrowing option for those who don't want to tap into their other financial assets or take out a traditional loan. In addition, if you pass away before you repay the debt, the remaining balance will be paid off using the death benefit from the policy, thus relieving your surviving family members of any financial burden.

You would use a LILOC as an interest-only revolving credit line collateralized by the cash value of a whole life insurance policy. Instead of purchasing liabilities with this line of credit, you buy assets that produce a return. 

Possible ways to spend LILOC money include, but are not limited to: 

Step 3: Turn Active Income Into Passive Income Using An Income Account And LILOC

This example illustrates how you use active income, income accounts, and LILOC to generate passive income. It is not a guarantee of performance. 

Suppose your business generated $100,000 in income. You would put $100,00 in an income account, then:

You enjoy a revolving credit line via your LILOC and have access to its cash value, potential investments, and a way to pay taxes. 

Bonus Step: Using Taxes And Building Passive Income

Using the government's money is better than using your money. That's not a controversial statement. You can use the government's money by choosing to forgo paying quarterly taxes. 

What follows is not tax advice but a strategy for making money work for you. 

Instead, you could send any extra money (less your expenses) into your LILOC (or other investment accounts). You'll use the money you don't spend on taxes on other assets. Typically, the return on your investment will be higher than the late penalty on your tax bill. 

As long as you pay your taxes by April 15th of any given tax year, you'll pay a 2% late fee. Instead of holding the money in an account, you're using the money to build wealth. 

Key Takeaways

Income accounts and LILOC are effective strategies for converting active income into passive income. An income account is an accounting entry that tracks money received from revenue-generating activities.

A life insurance line of credit combines the convenience of a revolving loan with the death benefit of an insurance policy, allowing you to borrow against it up to a certain percentage of its face value. You can build passive income by investing the money you save on taxes in a LILOC or other investment account. 

Lastly, it is essential to remember that these strategies are not guarantees of performance, and you should consult with a professional to discuss your goals. 

Contact us today to learn how to turn active income into passive income. We can help with the finer points of real estate investing and provide strategies for you to build wealth and secure your financial freedom.

Buying Real Estate Notes To Build Wealth

Are you a real estate investor who likes the idea of building wealth? Buying real estate notes might be right for you. 

We invited Paige Panzarello, CEO of Cashflow Chick, to share her expertise about building wealth with notes when inventory is low, and property prices are too high for any good deals. 

Panzarello draws on her 20 years of experience and $150 million in real estate transactions completed to explain the fundamentals of buying real estate notes and how they generate profit. 

Keep reading to learn more about building wealth by buying real estate notes. 

What Does Buying Real Estate Notes Mean?

To understand what buying real estate notes means, you need to understand what a note is. 

What Are Notes? 

Notes are a promise to pay or a debt instrument. The note's debt can be secured or unsecured: 

Also, notes can either be performing or non-performing:

Advantages

An advantage of buying real estate notes is that you become the bank. 

Another advantage is that by not buying hands-off investing--you're not a landlord. Instead, you own the promise to pay, not the property.

What Types Of Notes Should I Buy?

The type of note you buy will depend on your risk tolerance and investing strategy. But, Panzarello prefers to invest in non-performing real estate notes. 

Why Non-Performing Notes? 

Non-performing notes provide good value for a real estate investor. When you buy a non-performing note: 

How Do You Find Deals Buying Real Estate Notes? 

Building a network is the best way to find deals for buying real estate notes. 

Through your network, you may find deals buying real estate notes from the following: 

How Do You Make Money Buying Real Estate Notes?

How do you make money buying real estate notes? Usually, you'll buy the non-performing note at a discount on the unpaid principal balance. 

The following example uses figures for educational and illustrative purposes only. The figures are not a guarantee of performance. 

Here is an example of how you might make money buying real estate notes: 

Since it's non-performing and the person who has the note is not paying anymore, you can buy the note at a discount. 

In this instance, let's suppose that the discounted note price is 50% of the current market value of the property: 

 You are all in for $45,000 but have equity of $35,000. The equity is the home's current market value minus the cost of buying the note: $80,000 CMV - $45,000 note = $35,000.

But how do you tap into that equity? 

The way to make money buying real estate notes is through one of the many flexible exit strategies. 

4 Money-Making Exit Strategies For buying real estate notes

Foreclosure 

When you invest in notes, you need to be aware of the difference between judicial and nonjudicial foreclosure states.

In general, you want to avoid judicial foreclosure states because they take more time and money to foreclose. 

Foreclosure is usually the last resort, but since you're in the first position: 

Here is an example of how foreclosure may work out. 

Short Sale

A short sale usually takes 3-6 months. An example of a short sale looks like this: 

Deed In Lieu Of Foreclosure

This exit strategy generally lasts 3-6 months. You get the property instead of foreclosing, which acts as complete repayment of the loans. 

Once you have taken possession of the house, you can:

Establish Reperforming Loans

Getting the loan reperforming can take between 6-12 months. You can use $120,000 to work with borrowers to get them reperforming on loan by forgiving some debt to get them performing. It makes sense because you were never going to see that money anyway. 

You might give the borrower a $20,000 discount: 

You make money by:

Or, when they become performing notes, you can sell them to a performing note investor. 

Key Takeaways

As with all deals, buying real estate notes requires you to perform due diligence. 

The fundamentals of buying real estate notes include the following: 

Do you want to learn more about real estate investing? Join Royal Investing Group Mentoring, where our expert investor community discusses opportunities and real estate investing best practices.

Why Residential Assisted Living Investing May Be Profitable For You

People age. And as those people age, they will need a place to call home. Our aging population’s demand for homes may make residential assisted living investing an attractive addition to your portfolio.

As Isabelle Guarino-Smith, COO of Residential Living Academy, notes, 76 million Baby Boomers are entering the marketplace for assisted living. As a result of the Boomers' entrance into the market, Guarino-Smith argues that now is an ideal time to invest in residential assisted living.

The world is in flux, but the more things change, the more they stay the same. 

People will still get old and still need a place to stay. Consider this, the fastest growing demographic is people aged 80 and older. We have better medicine, technology, and healthcare. And it's making people live longer.

Those longer-living people may need some help with their day-to-day life or medical attention to preserve their quality of life. Our aging mothers and fathers still need a safe place to call home. 

In this article, we'll discuss the following: 

Residential Assisted Living Investing: Marketplace Truths

A residential assisted living is a group home that helps with the activities of daily living for the seniors who live there. 

It's not:

Instead, a RAL is a residential home in a single-family home residential neighborhood. Typically, an owner or operator renovates these homes with age-appropriate furniture and furnishings, especially the rooms and bathrooms. 

Common Myths and Misconceptions

Ways For You To Get Involved In Residential Assisted Living Investing

There are three primary ways you can get involved in residential assisted living investing.

#1 Own The Real Estate And Lease To An Operator

You would be known as a preferred real estate provider. You would need to purchase a home, renovate it, and get it licensed and ready for the operator. 

Some advantages of going this route include the following: 

#2 Own The Real Estate And Be The Operator

You work in the home and operate the business. Being an owner-operator means you'll help each senior with their day-to-day activities, including but not limited to: 

You can save money by doing this, but you will invest a lot of sweat equity. 

#3 Private Lending Or Partner

As a private lender, you provide the capital for an interested borrower who wants to operate a residential assisted living facility. Private lending is the most hands-off approach to breaking into the RAL market. 

Residential Assisted Living Investig: Model ROI

For these education examples, we will use an assisted living facility's average monthly cost of $4,500. For illustrative purposes, we'll use ten residents, which is typically the maximum number of residents that you can house:

________

For a more detailed breakdown of how much money you have the potential to make, check out Isabelle Gaurino-Smith's in-depth discussion of different earnings models.

Key Takeaways

There is a silver tsunami upon us composed of aging Baby Boomers. More than 76 million boomers are aging and are looking for places to live that are conducive to their lifestyle. 

One possible place that boomers will call home is residential assisted living (RAL) homes. 

RAL properties have several advantages that may make you want to include them in your investment strategy: 

The demand appears to remain strong as people live longer, so now may be an opportune time to invest in the emerging RAL marketplace. 

Do you have questions about how to get started in residential assisted living investing or real estate investing in general? 

Join our FREE Royal Investing Group Mentoring, where we meet weekly to discuss the nuances, challenges, and solutions involved with your real estate investments.