Sonia Hodgin of Formulaic Inc. Discusses 5 Real Estate Formulas Designed to Improve Transactions
We’ve all heard of people who live in a state like Colorado and earn income by renting out properties to vacationers in Florida or California. How can they afford to do this? It seems like it would take a lot of money, but Sonia Hodgin, the founder of Formulaic Inc. in Scottsdale, Arizona, disagrees. “It’s actually easier than you might believe to get started in real estate. Yes, you do have to work at it, of course, and you don’t get rich overnight. Even so, if you have enough knowledge and a realistic approach, you can do well for yourself, however you define that. What is especially useful is having the right information, and that’s what I give my clients at Formulaic Inc.: 300 real estate formulas that make conducting transactions much simpler.”
Sonia Hodgin and Formulaic 300
Sonia Hodgin enjoys teaching her 300 real estate formulas through Formulaic 300, her popular 3-day seminars held annually in Scottsdale, Arizona. “It’s a great opportunity for real estate investors to understand why they don’t need money to buy properties – they just need to know the right formulas to use,” Sonia Hodgin says. “That information can really help you as an exchanger. Usually, I only reveal my formulas at my seminars, but today I will share with you five so that you can see how much potential you have in real estate.”
Sonia Hodgin’s First Formula: Finance the Seller and Become a Note Holder
As Sonia Hodgin explains, “At my seminars, I explain to attendees that if you have a dead asset, a property in the negatives that is creating no cash flow, you can sell it, do a seller financing, and hold the note as the lender. That note creates monthly cash flow.”
The result, she says, is that this allows for additional formulas you can use to help up your basis. “Now that you have a performing asset, you can hold it, exchange it for a down payment on another real estate property, exchange it for face value, or use it as collateral to purchase another property.”
Sonia Hodgin’s Second Formula: Exchange vs. Sell
Sonia Hodgin continues, “My students then learn what they can do with that note. It’s great to have it, of course, but why not increase it? To up your basis or increase the value of your note, you can, perhaps, exchange the note for a higher value property that is just sitting there, undeveloped.”
Sonia Hodgin’s Third Formula: Unmarked Price Value vs. Benefit
Sonia Hodgin explains that by having a higher value property, you may up your basis. “Can you see the potential you have here?” she asks. “You can develop that property if you like, or you can continue to exchange, repeating the seller financing process and upping your basis each time. So, it becomes a win-win for everyone, as each party ends up with a cash flow.”
Sonia Hodgin’s Favorite Formula is the Fourth: Deferring Taxation by Exchanging LLCs and Their Assets, Known as Exchanging “Like for Like”
At her yearly Scottsdale seminars, Sonia Hodgin shows that by exchanging for higher, dead-asset property and upping your basis, you continue to create the portfolio value of each exchange. “It’s another win-win,” Sonia Hodgin says. “It’s deferred taxes and the avoidance of capital gains.”
Her students learn that there is a proper way to create the tax-deferred “like for like.”
“A note and a building are not ‘like for like.’ Because of this, you would end up in a taxation position. Instead, you would park the note in an LLC, and the building would be parked in another LLC. The LLC that holds the note for the building would be exchanged for the LLC that owns the note. This would create the ‘like for like,’” explains Sonia Hodgin. “However, I recommend that you speak to your qualified CPA on how to properly conduct this additional formula and that you always use a title company that you trust and is qualified.”
Sonia Hodgin’s Fifth Formula: Everyone Has Inventory.
Sonia Hodgin’s clients often believe they don’t have inventory. “That’s not really true. An old vintage Chanel purse or Rolex could value up to $100,000. Even a small truck sitting around could be valued at $5,000. What if you could exchange that as a down payment for real estate? Then you could convert your property into a residential income. There are no rules on how much a ‘down payment’ must be.”
Sonia Hodgin presents this scenario to seminar attendees: “We all know people that are sitting on inventory, like coin collections or gems. You can help to exchange it, and in trade, you can take 20% ownership for ‘sweat equity’ and use that dead asset to facilitate a down payment for an asset like a house. Now you own 20%, and the person with the dead asset owns 80% of the house. You can stay as an investor or sell your 20% ownership as a down payment for a second property. It’s a formula that creates never-ending potential. You could even sell the 20% and get cashed out.”
As an example, Sonia Hodgin once sold a property she purchased as a foreclosure and sold it as a seller financing for $250,000 with 6% interest. “I got a truck, two jet skis, and a fridge. The cash value of all was $5,000. I donated the fridge for a tax write-off to a nonprofit that gave me a $1,500 credit. For the truck, I got $5,000 by donating it to a teen program. I sold the jet skis and got $2,000. That’s a benefit of $8,000. I created the note of the house and then exchanged it for a commercial building as a down payment credit of $500,000; the building needed rehab, which doubled the value. I then leased it out to a coin mining company that remodeled it. I leased it out for a ten-year lease at $5,500 a month. Now I have a new inventory cash flow to play with.”
“Everyone Has Inventory” is true, she concludes. You just have to look around your home with a new perspective.
Sonia Hodgin and Her 300 Formulas with Formulaic 300
These five formulas are just the beginning of how you can conduct real estate transactions – Sonia Hodgin has 295 more for you to learn at her annual Scottsdale, Arizona seminars.
“Once you do, get ready to have a lot of fun. You’re about to experience a completely different world,” she says, smiling.
Sonia Hodgin and Formulaic Circle
Why not bring your knowledge of Sonia Hodgin’s 300 real estate formulas to Formulaic Circle, the company’s Wine and Dine Trading Circle, and an invitation-only event in Scottsdale, Arizona? “This is a blast to attend,” she says. “You join me and eleven other accredited investors from around the world and use your real estate savviness to exchange your assets. It gets pretty exciting, and we average $38,000,000 in transactions each time we meet. It’s a wonderful opportunity to put my 300 formulas into action.”
Sonia Hodgin and Formulaic Inc. 300
You can also use your real estate savviness to exchange as many investments as you like through Sonia Hodgin’s online exchange forum, www.formulaicinc300.com. The forum was created in San Francisco by a well-known software guru, Ed Wong. “What has made this so much fun for people is that they can exchange their assets and see the inventory offered by other people,” Sonia Hodgin shares. “It is for paid members only; the cost is $10,000/year for unlimited listings and exchanges. With one transaction, members have a return of investment instantly and beyond.”
Use Sonia Hodgin’s 300 Real Estate Formulas to Improve Your Life.
Sonia Hodgin acknowledges that 300 formulas can seem like a lot to learn. “Give yourself time to do it,” she encourages, “and let them sink in. Then, when you’re ready, jump into the real estate market. I believe that you’ll find that when you do, you’ll feel more confident and able to conduct transactions that are wise and beneficial to you and to your family.”