PREPAID Rental Income Every Year? Here's How... | Episode 113

Do you own rental property?  Want to get paid – in advance – for an entire year’s worth (or more) of rental payments?  It’s easier than you think, and I’ll tell you how right now.  I’m Bryan Ellis.  This is episode #113.

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Welcome back to the podcast of record for the Self Directed Investor community.  Thank you for making us the undisputed king of the jungle among savvy individual investors like you!

My friends, it’s the stuff of fantasy for landlords:  the tenant who will pay 100% of their annual rental fees up front, freeing the landlord from cash flow worries for an entire year at the time.  It’s practically nirvana!

Well, my friends, as it turns out, that’s possible… and much more easily than you think.

But before I tell you how that works, 2 quick announcements:

First, we’re getting a steady supply of REALLY GREAT cash-flow properties that are stocked with a paying tenant, that have solid property management in place, and that, most importantly, you can buy for FAR BELOW retail value.  No inflated costs for turnkey rental properties here, my friends.  Only problem is, because the deals are so good, we have a fairly low supply… we might get 10-15 or so of these deals per month, which is nowhere near enough to service all of my valued listeners.  Do YOU want to know the very moment these high-cash flow, high-equity opportunities are available?  Then join my TOP PICKS notification list.  It’s free for listeners to this show.  To join that list right now, please text the word TOPPICKS to 33444.  Again, that’s text the word TOPPICKS – no spaces, it’s spelled TOPPICKS – text the word TOPPICKS to 33444.

Second, and kind of related to the first, we’re going to host a very special event for those of you who want to build a strong portfolio of cash flow-producing, high-equity rental properties… but without having to get your hands dirty in the details of being a landlord.  There are a lot of people who will sell you rental properties… those are just commodities.  But cash flow properties that meet the S3 Standard of being SIMPLE and SAFE and STRONG?  Well… there’s only one way to get properties, and to build a portfolio, that meets that standard, and that’s to join us for the upcoming Self Directed Investor Cash Flow Summit.  I’ll host that event in a couple of months and it will be for a very limited number of attendees… each of whom will be shown how, and specifically given then opportunity, to build an astoundingly strong stable of cash-flow-producing, high equity properties.  My friends… why should you pay high prices for your rental properties from turnkey companies when you can get TRULY strong cash flow AND high equity, all from day 1?  So if you’d like to be notified about this opportunity, please be sure to get on the Self Directed Investor Radio email discussion group by texting SDIGROUP to 33444.  There are no spaces or periods, it’s SDIGROUP, text SDIGROUP to 33444.  You’d do well to be on that email discussion group list for early notification of the SDI Cash Flow Summit, as our last live event – the Passive Property Flipping Summit – filled to capacity weeks ahead of time.  So, again, text SDIGROUP to 33444.

My friends, if you own rental property presently, and you like the idea of getting paid all of your rental income for an entire year UP FRONT, then listen up!

I learned a very cool strategy recently that I want to share with you.  Folks, definitely get advice from your attorney before using this one, but I’ve got to tell you… the potential is ASTOUNDING to me…

You may remember back from episode #102, I told you about a special type of real estate deed called a “life estate”.  I’d suggest that you go back and listen to that episode again, because the strategy therein is REALLY amazing, and it’s definitely related to what I’m going to teach you today.

But today we’re going to have fun with another type of special real estate deed… and I’ll show you landlords how it can be used to generate income for large periods of time rather than on a month-to-month basis.

Here’s how it works:

You own rental property.  You’ve got a tenant paying $1,000 a month for your property.

Thing is… you want or you need a chunk of capital for something else… and getting most or all of your rent up front would be a great way to make that happen.

Here’s one way you could do that:

Find somebody who’s interested in TAX-FREE cash flow.

Do you think there might be SOMEBODY, SOMEWHERE who’d like to have tax-free income?  Hehehehe… yeah, I think so, too.  And I’ll tell you why this income can be tax-free, or at least, extremely LOW tax, in just a moment.

So here’s what you do:

You deed that rental property to this person – we’ll call her Barbara – who needs to have some income.  That’s right, you sell the property to Barbara entirely.  You make it HER rental property… HER tenant… HER cash flow, BUT…

There’s one big difference:

When you deed this property to Barbara, you’re not going to use a standard deed.  That would give her permanent ownership of the property… and that’s no good.  What you do instead is use a type of deed called an “Estate for Years” or “Estate for Term”.

What’s an Estate for Years?  It’s really just a type of deed that conveys ownership for a set, limited period of time.  So, going back to our example, you’ve got this rental property that’s producing income, and you’ve got Barbara who needs to have that income.

You know that what Barbara is looking for is an 8% ROI, so what you do is work backwards.  You use your trusty-dusty, handy-dandy financial calculator and you plug in the numbers and you determine that you can sell a year’s worth of payments to Barbara at an 8% yield for about $11,500.  So you’re taking $500 less to get all of your money RIGHT NOW…

And actually, you may not even need to take a discount at all because of another huge advantage that Barbara will enjoy as a result of this transaction:  Tax Savings.  Because for that year while Barbara owns that property, SHE is entitled to take the depreciation deductions.  As you may know… depreciation can yield some VERY substantial tax savings… and in this way, the income she generates is going to be worth more than 8% to her, because she’ll pay zero, or very little, in taxes as a result of that depreciation.

This is PARTICULARLY cool for those of you who own rental property in your IRA or 401k.  Why?  Well, you’re not using the depreciation deduction anyway.  So you’re not even losing any tax benefits by doing this!

Now, my friends, I realize that there are lots of variables and important things to consider that we’ve not discussed in this brief show, but look, my point is to expose you to a new idea… a new way of thinking.  And my friends, this is some SERIOUSLY COOL stuff.  For those of you who are a little bit creative, I’m sure the wheels are really turning in your mind right now!

That’s all for today, my friends!

Remember – be SURE to get on the SDI Radio private discussion group list by texting the word SDIGROUP to 33444.  That’s how you’ll get early notice for my upcoming events – which always fill weeks in advance – and early notice of other great benefits of being a listener to Self Directed Investor Radio.

And hey… right now is a GREAT time to go back and listen to any of the 112 episodes that came before this one.  Every one of them is at SDIRadio.com – enjoy, and please, tell your friends!

My friends, invest wisely today… and live well forever!

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