You probably formed your Limited Liability Company or corporation to shield your personal assets. However, did you know that keeping good records of your company’s actions can further reduce your personal liability?

If your company is ever sued, the other party’s attorney is probably going to ask to see your company’s records during the discovery phase of litigation. He or she is looking to determine the best way to recover damages for their client, and many times don’t care whether they are business or personal assets. If you have more assets held in your personal name, the lawyer may attempt to recover your personal assets despite the corporate protection. This is called “piercing the corporate veil” and it’s the most litigated issue in corporate law.

The corporate law concept of piercing the corporate veil describes a legal decision where a shareholder or director or member of a legal entity is held liable for the debts or liabilities of the company despite the general principle that shareholders or members are immune from suits in contract or tort that otherwise would hold only the corporation liable. (Wikipedia.com)

Piercing the corporate veil is typically most effective with smaller privately held business entities in which the company has no assets. In this situation, Plaintiffs will usually seek to hold a related person with more assets liable rather than a small business with no assets.

One way to reduce your risk is to keep good company records because it shows that you are serious about running your business legitimately.

Keeping good corporate records is not difficult and only takes a few minutes once you have a system in place. Law firms assemble corporate minute books for their clients when they are retained to form a new legal entity. You can assemble one yourself or contact me for assistance.

The important items that go in the book are your formation documents, tax documents, business licenses and anything else you think should go in the book. Additionally, each time your company takes an action that will materially impact your business, such as merging with another company or purchasing property, the owners should prepare a resolution authorizing them to take that specific action. A written resolution in lieu of a formal meeting is fine when signed by all the owners or officers. The original fully executed copy goes into the company’s minute book.

I propose that limited liability companies should maintain corporate records much like corporations are required to do. This is because limited liability companies have not been in existence as long as corporations. I think the standard of recordkeeping is actually higher because we don’t know as much about how the courts treat limited liability companies.

Simply put, keeping good corporate records is a must for an owner of a business to reduce personal liability. In addition, it just makes sense to have your company’s records organized and in a safe place. Losing a key document is inconvenient and in many cases it’s a hassle or impossible to get a copy once you’ve lost it.

If you have questions or want additional information, please contact Christine Springer at Christine@DesertEdgeLegal.com

_______________________________________

My family and extended family (all Canadians) began looking at Puerto Peñasco, Mexico, a.k.a Rocky Point, as a vacation destination and as a potential real estate investment over five years ago when we visited the area for the first time. On that visit when we walked into our friends condo and saw the spectacular blue/green ocean view from their balcony, we knew at that moment that we were hooked and wanted a condo for ourselves!

Within hours we were looking at condo developments and back then there wasn’t much to choose from. Any “fear” we had about buying in Mexico was put to rest after talking personally with Stewart Title, a U.S. company, we were assured that our initial investment was secure. What we also found during that trip was that Rocky Point is a very affordable place to buy oceanfront/ocean view property and we thought this would be our chance to own on the ocean and have a place that our family and friends could enjoy. We also felt that it would be great to pass it onto our children in the future.

After looking at various developments, we settled on Las Palmas as we liked the fact that they were a smaller development with the thought of it being less crowded and having more owner involvement. What we liked even better was that they offered both bedrooms with an ocean view as well as balcony access which we didn‘t find with other developments. At that time, it was still under construction which worked out perfectly for us as we needed the time to save and the 1 ½ year wait was well worth it.

Now that we are the proud owners of two condos at Las Palmas, our thoughts on owning property in RP are that it is a “no brainer” especially considering the close proximity to Arizona and California which makes it an affordable vacation. Additionally, people can easily fly into Phoenix Sky Harbor or Mesa/Phoenix Airport in the East Valley, rent a vehicle and be on the beach in 4 hours, and they do as we’ve met many owners and renters at our resort who come from all over the world (even Italy!)

We do rent our condos out and are fortunate that we’re able to get down there monthly to check on them and do any necessary maintenance that may be needed, and so far it has been minimal. The resort has 24 hour security so that helps keep our mind and those of our renters at ease. We also have made great friends with other owners and we all keep an eye on each other places and report back if we think something isn’t right. Again, that’s why we like the smaller resort. There are some really great property management companies down in RP that will manage your property for you if you choose to rent it and something to consider when deciding to invest in Rocky Point. We have absolutely no regrets about purchasing our condos. They’ve been a great investment over the past five years. I only see that continuing with the new highway to California being constructed as well as the new International Airport opening next year.

Whether you buy or rent in Rocky point, it is really an inexpensive getaway since the cost of fuel being so much cheaper in Mexico and yes it is very safe to use. Also, the new Super Val grocery store is open and is very nice and clean, so you can even do your grocery shopping there instead of bringing it down. Super Leys is also another choice for grocery shopping. Of course if you like fresh seafood, especially shrimp, there is a great assortment of this down at the Fish Market along the Malecon.

We would like to share our home away from home with you and are offering an additional 10% off the already discounted rental rates to all Arizona Cash Flow Club Members. You can view our condo and resort at the website noted below. If you have any questions, or are interested in renting a condo, don’t hesitate to contact us and be sure to mention that you’re with Arizona Cash Flow Club. I would also be happy to answer any questions you may have about vacationing in Rocky Point in general.

Corey and Joe Marten
Website: www.picasaweb.google.com/beachykeencondo
Email: Beachykeencondo@hotmail.com
Phone: 480-225-4880


_______________________________________


Only 6% of commercial professionals hold the elite CCIM designation, which is conferred by the CCIM Institute, an affiliate of the National Association of Realtors®. A Certified Commercial Investment Member provides the assurance that every decision will be made in the best interests of YOUR long-term investment objective.

Cash flow, financial terms, and taxes all have a significant impact on the financial performance of a commercial property. But the real estate cash flow model, time value of money, finance programs, loan terms (variables), appraisal methods, measuring investment value and performance, and taxation issues can also impact your investment dollar.

Linda Gerchick, CCIM has a thorough mastery of the most powerful and inclusive financial analysis tools, concepts, and calculations available in the industry, including proficiency in the use of a financial calculator. Linda's analysis will help you make sound decisions.

Industry experience. Unparalleled education. Today’s technology. A network of support. These factors set CCIMs apart.

Team Gerchick
Linda Gerchick, CCIM
RE/MAX Commercial Investment
602-688-9279
Linda@justsoldit.com

_______________________________________



Commercial building and residential rental owners can increase cash flow and maximize tax benefits by applying cost segregation to their properties. Cost segregation, based on more than 50 years of tax code, is simply depreciating the personal tangible property, land improvements, and building components separately. Compared to straight line 39 or 27.5 years, cost segregation typically doubles, often triples, and sometimes quadruples depreciation in the first five years, adding thousands to tens of thousands in free cash flow.

Other benefits for cost segregation are:

• Helps ensure you are getting the benefit of all the bonus depreciation in economic stimulus packages

• Allows you to write-off the remaining tax basis of any major replacements (this is a great rehab strategy)

• Improves the DSCR that may be taken into consideration by loan underwriters.

• If you already purchased the property, you can take catch-up depreciation in the current tax year OR re-file past year’s returns for an immediate tax refund.

• Can provide documentation for insurance claims.
  

A cost segregation study on a single family residential rental, which does not have tremendous amounts of personal tangible property, will provide a cash on cash return in cash flow of 100% or more in the first year alone. Depending on the property, you can receive a cash on cash return in cash flow of as much as 300% or more in the first year alone.

If you are already doing 1031 exchanges and not doing cost segregation, you are missing a sizable piece of your tax advantage. Cost segregation and 1031 exchange go very much hand in hand. The exchange allows you to defer the depreciation recapture as well as your capital gains.

Very few CPAs provide tax strategies to their clients. Many people think their CPAs are taking care of the depreciation, not understanding they are getting the straight line 39 or 27.5 years only. In addition, many are not getting the benefits of the bonus depreciation.

Historically cost segregation studies were only available to clients of Big 4 accounting firms. Cost Segregation Strategy, Inc. provides cost effective cost segregation studies to both commercial building and residential rental owners nationwide.

The initial review for your tax benefits and fixed price quote are free. If you’re curious about what cost segregation can do for your bottom line, visit us today at www.CostSegStrategy.com or call us at 602-323-4359.

_______________________________________


While in most states the formation of a simple Limited Liability Company (LLC) can protect licensed individuals (Governed by a State Board) from personal liability for business debts and claims, Arizona requires a Professional Limited Liability Company (PLLC) rather than an LLC.

Q. What is the difference between an LLC and a PLLC?
A. A PLLC is an LLC organized under Chapter 4 of Title 29 of the Arizona Revised Statues for purposes that include rendering one or more categories of service that may be lawfully rendered only by a person licensed or otherwise authorized by a licensing authority in Arizona to render the service. The PLLC specifies that in those cases where only a person licensed or otherwise authorized by a licensing authority in Arizona to render one or more categories of service may do so, a PLLC must be used (A.R.S. 29-843).

Q. How do I form a PLLC?
A. A PLLC is formed via the same forms as an LLC, available from the Arizona Corporation Commission or a document service provider like LLC Protection Services. First, one must fill out and file the Articles of Organization and include key information that the Arizona Department of Real Estate requires. After filing the Articles of Organization a Notice of Filing must be published (Notice of Publication) in a newspaper of general circulation three times with 60 days from the received date of the filing (State Law). In addition, after publishing, one must file with the State of Arizona Department of Real Estate Form LI-231 (Name Change), Application for a License as a Professional Limited Liability Company (The Real Estate Agent’s Name Followed by PLLC). The form is available at the Arizona Department of Real Estate and has a $10.00 processing fee.

Q. What is the difference between a PC and a PLLC?
A. A Professional Corporation (PC) is a corporation where you are both an officer and an employee of the corporation. The PLLC is an organization where you are a member and owner, not an employee.

For questions about forms and pricing, visit www.LLCFilingServices.com or call 602-235-0079 today.

Note: LLC Protection Services is a document provider, NOT a document preparer and their fees cover the providing, filing, publishing, and all the administrative services needed to form your LLC or PLLC Articles of Organization.

_______________________________________

In 2007, 16 million Americans rented vacation homes. It’s no doubt renting a vacation home can be a great bargain given the average square foot costing a lot less than a hotel room. Plus there is the added convenience of a full kitchen, dining area and extra bedrooms or bathrooms for those traveling with their family. As any parent of small children can attest, there is an undeniable benefit to not having to eat out all three meals or having to share a space that doesn’t allow the parents and children a quiet and private space to relax.

But what does this mean to an investor? Right now there are fire sales going on in most vacation destinations. According to the Wall Street Journal, “There are some amazing discounts around. You can find properties selling for prices last seen in the late 1990s.”

Most investors are aware of the capital gains tax deferral benefits of a 1031 exchange. Historically you could only exchange property held for investment or used in a trade or business. Earlier this year the IRS recently issued a new ruling providing guidelines for individuals wanting to use a 1031 Exchange for their vacation homes. The ruling released in Rev. Proc. 2008-16 (a Revenue Procedure) details the steps a taxpayer must take in order for the IRS not to contest the investment standing of their vacation homes. (Read the full Rev. Proc. here). Guidelines issued by the IRS at a glance are:

You must have owned the property you are replacing for a minimum of 24 months

You must own the replacement property for a minimum of 24 months.

In each 12 month period for the existing and replacement properties 1) the taxpayer rents the dwelling unit to another person or persons at a fair market rental for 14 days or more, and 2) the taxpayer’s personal use of the dwelling unit does not exceed the greater of 14 days or 10 percent of the number of days during the 12-month period that the dwelling unit is rented at a fair rental.

If you plan on taking advantage of this incredible buyer’s market and if you plan on purchasing a home for vacation purposes, it is essential that you keep accurate records of the rental history and the days you occupied the unit for maintenance purposes and your personal use days. If you allow friends or relatives to use your property without paying rent, it will count against your personal use days. If you stay within the IRS guidelines the IRS and consult with your tax professional, you can pick up a great property at a great price, defer taxes and build a lifetime of memories for your family!

_______________________________________

On July 23 the IRS announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8) cents from the 50.5 cent rate in effect for the first six months of 2008

Mileage Rate Changes

Purpose	Rates 1/1 through 6/30/08	Rates 7/1 through 12/31/08
Business	50.5	58.5
Medical/Moving	19	27
Charitable	14	14

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Either way, be sure you are keeping good records. You don't have to invest in an elaborate record keeping system. Keeping the expense verification you'll need for tax time can be as simple as entering the data in a diary or account book. The key here is to faithfully enter the expenses. It's also a good idea to keep evidence -- receipts, cancelled checks, bills -- that, along with your records, supports your expenses.

_______________________________________

While tax rebates of up to $600 per person the centerpiece of the Economic Stimulus Act of 2008, the new law also provides two significant tax incentives for business. The first is Code Sec. 179 expensing. Before the new law, a business could deduct (“expense”) up to $128,000 of the cost of depreciable tangible personal property used in the active conduct of a trade or business in 2008. The new law almost doubles the amount of deductible Code Sec. 179 expensing for 2008 to $250,000 and increases the threshold for reducing the deduction to $800,000. It applies to property purchased and placed in service in tax years beginning in 2008. Eligible businesses for this one-time tax code change for 2008 include sole proprietorships, partnerships, and corporations.

Depreciable tangible personal property is simply equipment that is 1) used in your business or income-producing activity, 2) have a determinable useful life, and 3) must have a determinable life of longer than one year. Items such as cars, trucks, computer equipment, and more qualify. See IRS publication 946 for details.

The second tax incentive for small businesses is “bonus depreciation”. Businesses can depreciate 50% of the value of a specific asset in the first year in 2008, up from the typical 20%. The property must be purchase and placed in service during 2008. Eligible properties that can be used for this deduction include machinery and equipment (vehicles over 6,000 lbs), furniture and fixtures, and most storage facilities. Examples can include other vehicles and computers.

It’s not what you make, it’s what you keep. The fact is that most small businesses overpay their taxes because they don’t understand the tax rules game. A little time spent in educating yourself in legal deductions can add thousands to your bottom line.
_______________________________________

Article Archive Homeownership Accelerator
10 Factors to Entrepreneurial Wealth
Skimming: The New Identity Theft
Coastal Highway Update 02/20/2008
A Visit To El Golfo
Ladies Who Launch
Lease Options & Equitable Interest
The Five Biggest Marketing Myths
Three Myths About Retirement Security
Bill Iannelli's Phoenix Market November Update
Investment Tips from Professor Goodner
Rocky Point Update 03/13/2008
Rocky Point Update 02/14/2008
Rocky Point Update 12/27/2007
Rocky Point Update 12/06/2007
Rocky Point Update 11/15/2007
Rocky Point Update 11/01/2007
Rocky Point Update 10/25/2007
IRA Investing
Housing Market Through 2007
Private Money
What's Your Name Worth?
Backing Up
About Short Sales

The biggest risk in making investment decisions? Not understanding the options presented to us when giving the “Yes” or “No” to move forward with a plan or investment. In fact, one of the main dangers we face as investors is in the overwhelm and sometimes chicken little philosophies that we have been exposed to from media, industry and book experts, family, and friends, that numbs our senses to the huge risk of not stopping to put the information into perspective to our individual situations.

The media has done a good job of informing investors of what is going on in their world, but investors haven’t done a good job of asking, “How does this news affect me, personally?” This exact same question is key when sitting down with a professional that is offering us a solution to one of your investing problems, whether it is a financial planner, a REALTOR®, or a banker. But what are some of the questions that ALL of us should be asking, to help us make better investing decisions?

1. Worst case scenario, how do I get my money back, or not have it set me in into a devastating position if I don’t? Losing our capital is a real possibility every time we are exchanging money for an investment. If you have $4 million of liquid assets, and are making a $40,000 investment, perhaps you are not as concerned as if you have $40,000 of liquid assets, and are making a $40,000 investment. Or perhaps you are – know your personal comfort level, and be sure to ask the question.


2. Professional, who are you, and why are you making the recommendation you are making? Regardless of the perceived urgency of an opportunity, there are thousands of other investments out there. The likelihood of finding the next Google or Microsoft at that perfect moment before it starts to climb? Very slim. If someone is presenting to you an offer that is for a limited time only, or there is no way you can possibly lose, or there is no risk, then you aren’t being told the whole story. Work with reputable professionals – as the saying goes “if you think a professional is expensive, try an amateur.”


3. What happens if life changes cause me to need to get access to my money sooner than the investment guidelines? Know how long it can take for you to get your money back in the case of an emergency. Personal job stability, market conditions, and medical problems are all factors that can affect your cash flow needs. If you need to take money out of an investment earlier than anticipated, it is sometimes an option, but an expensive option that you need to understand.

Don’t’ get caught up in what everyone else is doing, the real estate market and the price of a barrel of oil. These topics are everywhere in the newspapers and news shows, but they are most likely out of your control. What is IN your control is making educated decisions that impact your personal situation.

The above questions are only some of the ways to better understand an investment option that you are considering. Take control of your risk, by fully understanding how an investment affects your personal situation, and what steps you can do to protect yourself and your future.

Have other questions? Stephanie Shaw is Owner of CGE Financial Services, LLC. Ms. Shaw has a personal and business philosophy that YOU have the best interest in your money, and she works for the benefit of YOU, instead of a company or product. Ms. Shaw can be reached at 480-855-5054, or sshaw@cgefinancialservices.com
_______________________________________

Private money is a great way to find cash for deals. This free eBook "How to Find Millions in Private Money!" from Cash Flow Institute tells you how. Click here to download your free copy now.
_______________________________________

According to IMAPP as of July 22, there are 8,800 properties in Maricopa County scheduled for auction in August and another 7,343 in September. Working out an alternative to foreclosure is very important. If you or someone you know is facing foreclosure, these are some tips for working out an alternative and reasons why you should.

Contact Your Lender
“Lenders are psychotic” one short sale expert recently said. This is very true. Loss mitigation departments (the departments that negotiate alternatives to foreclosure) for most all lenders are not equip to handle the foreclosure volume. They have been unable to hire and train enough people to provide the expertise required to successfully complete a work out process. However, given the losses, many lenders are stepping up and making it easier to avoid foreclosure. You may be able to:

• Have Your Loan Modified

The lender reduces your interest rate and/or arrears are tacked on to the end of the loan.

• Give Your Deed In Lieu

In summary, the lender takes the keys to the house in exchange for you being released from your loan. A Deed In Lieu is an option if you have only one lender.

• Sell via Short Sale

In a short sale the lender(s) accepts less than what is owed for the property to release the loan. Successful short sales typically require a real estate agent or investor with short sale negotiation experience.

Foreclosure Hotlines
Many states have incorporated hotlines for people facing foreclosure. In Arizona the number is 877-448-1211. Unfortunately numerous attempts to dial this number over the last few days resulted in “the number you have dialed is unallocated” or busy signal messages. If you can not get through to a counselor, you’ll need to navigate an alternative to foreclosure yourself. The Phoenix Government has a website at here that has information on the foreclosure process, working with lenders, foreclosure rescue scams, credit repair scams, as well as typical questions and answers.

If You Committed Fraud
If you lied on your loan application, you can still work out an alternative to foreclosure. In the process it is important that you do not provide proof to your lender that you lied. If you want to work with your lender to arrive at an alternative to foreclosure, seek legal counsel preferably before speaking with your lender and certainly before providing your lender with any financial statements. Good legal counsel should be able to negotiate so that you don’t have to provide any statements that might prove you are guilty of fraud.

Why You Want to Work It Out
Fannie Mae lending guidelines issued May 31 state that if you have a short sale (deed in lieu would be considered the same), you can not qualify for another home loan for one year. If you have a foreclosure, it will be five years. In addition, if your property goes to foreclosure, your lender may still be able to sue you for debt owing. If they win, you may be forced into bankruptcy. Bankruptcy remains on your credit report for ten years.

Limits of Anti-Deficiency
Many states, including Arizona, have anti-deficiency statutes. This means that when a property goes to foreclosure, the lender can not pursue a deficiency judgment (the difference between what you owed and what they got) for certain types of properties. In Arizona, non-VA lenders can not pursue deficiency judgments on single family or duplex properties on less than 2 ½ acres. As in most states with anti-deficiency statues, any loan on the property was not used solely to purchase the property (cash out, HELOC, etc.) that lender CAN pursue you for the deficiency. If you went through foreclosure and had a second, it is likely that the lender for the second received nothing, in which case the lender can sue for the full amount of the loan. And lenders are beginning to file suit. If you’re facing a foreclosure and have a refi/cash-out first or cash-out second, it is doubly important that you attempt to work with your lender(s) to work out an alternative to foreclosure.

_______________________________________

Karl Stauffer's Weekly Market Update for the week ending July 11 shows the Phoenix metro market stable with about an 8 1/2 month supply of housing valley-wide. Read his full report here.

_______________________________________

For those homeowners who’s repeated efforts to work out payments for their mortgages are met by a brick wall from the loan servicers that pile on unfair fees and penalties increasing the arrearage to exorbitant amounts by their delay tactics, you can fight back with a new legal strategy called “produce the note”. Tampa attorney Chris Hoyer advises consumers to challenge their lenders to prove that they have ownership of the note on the Consumer Warning Network.

Chris states “This process is not intended to help you get your house for free. The primary goal is to delay the foreclosure and put pressure on the lender to negotiate. Despite all the hype about lenders wanting to help homeowners avoid foreclosure, most borrowers know that’s not the reality.”

During the lending boom most mortgages were sold to another lender or sold to investors as securitized packages. In the rush to turn these over as fast as possible to make the most money, many of the new lenders did not get the proper paperwork to show they own the note and mortgage. As a result, many lenders who are now moving to foreclose on homeowners don’t have the proper paperwork to prove they have a right to foreclose. Katherine M. Porter, Associate Professor at University of Iowa, found that proof of mortgage note ownership is lost in approximately 40% of the loan sales.

The goal of the “produce the note” strategy is to make certain the lender suing you is, in fact, the owner of the note. There is only one original note for your mortgage that has your signature on it. This is the document that proves you owe the debt. This is very important. If the lender is allowed to proceed without that proof, there is a possibility another lender, which may have bought your note along the way, will also try to collect the same debt from you again.

Chris reports “A Tennessee borrower recently had precisely that happen to her. Her lender, Ameriquest, foreclosed on her in July of 2007. About three months later, another bank sent her a default notice for the mortgage on the house she just lost. She called to find out what was going on. After being transferred from place to place and left on hold for lengthy periods of time, no one could explain what happened. They said they would get back to her, but never did. Now, she faces the risk of having her credit continually damaged for a debt she no longer owes.”

Attorney Chris Hoyer’s Steps to Follow
If your lender has already filed suit to foreclose:

1. Use this fill-in-the-blank legal request to your lender asking that the original note be produced, before it can proceed with the foreclosure. In some jurisdictions, the courts require the original request to be filed with the clerk of court and a copy of the request to be sent to the attorney representing the lender. To find out the rules where you live, call the Clerk of Court in your jurisdiction.
2. If the lender’s attorney does not respond within 30 days, file a motion to compel with the court and request that the court set a hearing on your motion. That, in effect, asks the judge to order the lender to produce the documents.
3. The judge will issue a ruling at your hearing. Many judges around the country are becoming more sympathetic to homeowners, because of the prevalence of predatory lending and servicing. In the past, many lenders have relied upon using lost note affidavits, but in many cases, that’s no longer enough to satisfy the judge. They are holding the lender to the letter of the law, requiring them to produce evidence that they are the true owners of the note. For example:
   

If you are in default, but your lender has not yet filed suit against you, use this fill-in-the-blank letter to your lender which also requests they produce the original note, before taking foreclosure action against you.

Chris Hoyer says “Most homeowners just want these lenders to give them reasonable terms on their mortgages, many of which were predatory to begin with. With the help of judges who see through these predatory practices, lenders will feel the pressure to work with borrowers to keep them in their homes. Don’t forget lenders made incredible amounts of money by using irresponsible practices to issue and service these loans. That greed led to the foreclosure crisis we’re in today. Allowing lenders to continue foreclosing on home after home, destroying our neighborhoods and our economy hurts us all. So, make it hard for your lender to take your home. Make ‘em produce the note!”

_______________________________________
In the last few years we have witnessed a rise and subsequent correction in both the stock and real estate markets. This has left investors either more wealthy, poor, or in limbo. As this article is being written in the spring of 2008, the correction continues in both sectors. In addition, the price of oil is well above $100 a barrel. Our U.S. Dollar continues to weaken and inflation is affecting our everyday lifestyles.

Does this mean that the sky is falling? Of course not, we have seen numerous economic cycles in our history, and no matter what, there are two things you can count on, investments become under valued or over valued. One investment, which has gone up at this time, shows no signs of topping out. This is silver, both in physical as well as in paper form (stocks).

Since the year 2002, the price of silver has steadily risen from $6 an ounce to a current price range of $16-$18 per ounce, and most of the top tier silver mining stocks have had gains well over 100%.

Despite all this, most investors are unaware of these games. This is due to the fact that silver gets little to no exposure in the main stream financial press, which seems to be enamored with the stock market, real estate, oil, and even silver’s big brother gold.

The positive side of all this is there are many people that have yet to participate in this current bull market, thus creating some terrific profit potential for those investors willing to take a position at this present time. One of the rules most successful investors stress over and over again is to know what you are investing in.

That being said, I will briefly explain some uses for silver as well as why silver investing makes common sense at this time.

1. Water Purification. Silver ions have been used to purify drinking water and swimming pools for generations. Today, silver is used in over half of the water purification systems sold in this country. This is due to silver helping prevent build up and algae in the filters.


2. Medicine and Health. According to medical studies in the 1970’s, it was discovered that silver ions promote bone growth and kill surrounding bacteria. Further research shows antibiotics can kill perhaps a half dozen disease organisms, but silver can kill over 600. There are companies currently developing hospital wear lined with silver particles to prevent hospital related infections.


3. The Burning Sun. A major factor living here in Phoenix is the, “I can fry an egg on the sidewalk” weather. One of the ways to fight off the rays of the sun is with invisible silver, which is a transparent coating of silver on double pane thermal windows. Besides fighting off the rays, it also reflects interior house heat.

Some of the reasons to consider taking a position in this sector include supply and demand, affordability, and main stream exposure. I’ll talk about them next.

Since 1990 the amount of silver needed has outstripped its supply, this is due to two factors, silver usage has increased and mining production slowed down in the 1980’s and 1990’s. In addition, the U.S. Government is currently out of silver, so in order to keep its silver American Eagle program going, they must purchase silver in the open market.

Unlike gold, which is currently in the $800 range, silver is still under $20 per ounce. Thus, with a few hundred dollars, an investor can ride the bull’s back.

Many Wall Street firms have instigated coverage on the top tier silver mining stocks. Thus money managers, financial advisors, and stock brokers who need new places to invest their client’s money can now look at this sector. This provides more exposure to the general investing public.

Exposure to BOTH, physical silver and silver mining stocks, can help bring balance to an investment portfolio. This in turn can provide more protection in these uncertain economic times.

While nothing is guaranteed, there are some trends we can see from the past. If you were to invest $10,000 of silver in 2002, it would be worth over $30,000 today, and a $7,000 investment in Pan American Silver (PAAS) would now be worth around $35,000. (Past performance is not a guarantee of future results).

Eric Aceves has worked in financial services since 2001 as a financial planner and as a retail stockbroker. Even though Mr. Aceves monitors the overall stock market, he still believes silver is one of the most undervalued investments at this time. Mr. Aceves is only a consultant, not a Broker or Dealer, and charges accordingly.

Eric Aceves, Silver Consultant
Direct: 480-734-8356
_______________________________________


_______________________________________

The Gulf Opportunity (GO) Zone Act of 2005 contains significant economic incentives to rebuild 11 counties in Alabama and much of the Gulf Coasts in Louisiana and Mississippi following the devastation of Hurricanes Katrina, Rita, and Wilma. Federal and state incentives include bonus depreciation, special treatment of net operating losses, loan forgiveness, and low income housing credits. For investors looking to reduce their tax bill with properties that will increase your balance sheet, the GO Zone might be right for you.

Bonus 50% Depreciation
The GO Zone Act allows a 50% bonus depreciation allowance for GO Zone business property that is placed in service before 2008 (before 2009, for nonresidential real and residential rental property) AND exempts such depreciation allowances from the alternative minimum tax.

What does Bonus Depreciation do for your bottom line? Here’s an example of a duplex:

Purchase Price $200,000
Lot Value (20%) 40,000
Improvement $160,000

Bonus Depreciation = $160,000*.50 = $80,000

Tax Savings at 25% Tax Bracket = $20,000
Tax savings is money in put your pocket due to the deduction.

Treatment of NOL Losses
Net Operating Losses (NOL) attributable to GO Zone losses. The Act extends the NOL carryback period from two to five years if a portion of any NOL for any taxable year is a qualified GO Zone loss..

Loan Forgiveness Program
Mississippi has implemented a Small Rental Assistance Program (SRAP) that forgives your loan up to $40,000 per unit. You do need to hold the property for 5 years and there are rent control provisions.

Low-Income Housing Credits
The original act provides for an increase in the housing credit dollar amount for low-income housing located in the GO Zone for 2006, 2007, and 2008. Senate Bill S. 1180: Workforce Housing Construction for the GO Zone Act of 2007 introduced last year proposes extending the GO Zone low income tax credit until 2010.

To find out more about GO Zone properties and how they can increase your balance sheet while reducing your tax bite, contact Christine Arrington, Keller Williams Realty Centreville at 703-587-4817 or Chris.Arrington@kw.com.
_______________________________________