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The Investment News: June 2011 Newsletter for MAREI

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The monthly newsletter for Mid-America Association of Real Estate Investors. A Real Estate Investing Trade Association based in the Kansas City Metro Area. Find us online at www.MAREInet.com.

The monthly newsletter for Mid-America Association of Real Estate Investors. A Real Estate Investing Trade Association based in the Kansas City Metro Area. Find us online at www.MAREInet.com.


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  • 1. MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORSInvestment NewsNETWORKING : EDUCATION : COMMUNITY June, 2011 MAREI’s First QR Code : Get out your Smart Phone and Check it Out!
  • 2. m ar ei BUSINESS MEMBERS ADDRESSING THE NEEDS OF THE REAL ESTATE INVESTORType Company Web Phone ContactAttorney Wise / Anderson BobWiseLaw.com 816-942-5925 Bob WiseContractor Te-Tee Light MAREI Vendor 816-356-1870 George BaiInsurance APIA REOIns.com 877-752-2742 Lisa GoodnerLender Argentine Federal Savings ArgentineFed.com 913-402-1500 Ann WilkinsonRealtor Realty Resource KCInvest.com 816-523-4400 Kim TuckerSupplier Canyon Stone Canyon-Stone.com 913-254-9301 Matt PuckettTitle Accurate Title Company AccurateTitleco.com 913-338-0100 Jackie WhiteWholesale kcmoHomeBuyer kcmoHomebuyer.com 816-200-2198 Don Tucker Real Estate Investors and Landlords depend on a well rounded team of professionals. If you are building your team or looking to make a trade, start your recruiting with our Vendor Members and Business Associates. See a complete list of suppliers and any discounts they may of- fer to MAREI members by visiting, www.MAREInet.com. Look in under the Toolbox tab under “Service Directory”. http://mareinet.com/marei-tool-box/business-associatesPage 2 MAREInet.com
  • 3. Contents MAREI News In This Issue MAREI Business Members 2 MAREI Staff 5 Notes from Director 6 Assessed Value vs Market Value 8 Private Lending 10 What Scares Investors 12 Creative Financing or Mortgage Fraud 16 Get Involved, Make a Difference 18 JUNE 14TH Training Events 20 Calendar 22 MEETING Classifieds Foundations: 5 Tips for Inspections 24 26 Features ‫ ׀‬June 2011 Who are private lenders, What are the reasons that where can I find them, how investors advertise? To find buyers or sellers and 10 do they work, how can I get them to lend me money. 12 get the phone ringing? So now the phone rings, now what?Investment News Page 3
  • 4. MAREI Notes Contact Information PO Box 8685, Prairie Village KS, 66208 Phone: 913-815-0111 Fax: 816-523-4448 Our Mission Statement Mid-America Association of Real Estate Investors is dedicated to promoting ethical real estate in- vesting and to protect and promote the best interest of our membership through educational and networking opportunities as well as community, legislative and public relations. Legal Disclaimer MAREI does not exist to render and does not give legal, tax, economic or investment advice and disclaims all liability for the action or inaction taken or not as a result of communications from or to its members, officers, directors, employees and contractors. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment and related matters concerning real estate and other investments. Content Disclaimer The views and opinions expressed by authors of articles contributed to this newsletter do not neces- Matt Puckett sarily reflect those of the association, the board of directors or the staff. Canyon Stone Advertise in the Investment News Rate Schedule Size Non-Member Member Business Associate Full Page $175 $140 $115 1/2 Page $145 $105 $85 1/4 Page $75 $65 $50 1/8 Page $55 $35 $25 A 10% discount is given on ads pre-paid for 6-12 months. Any changes to a pre-paid ad will incur a minimum charge of $20. The deadline to submit ad copy is the 1st of each month. All ads must be prepaid. Contact to verify ad format can be accepted. PDF preferred. There is an additional charge of $25 to typeset a business card ad or 1/4 page ad layout, $60 for a 1/2 page or full page lay-out. Opportunities also exist for advertising on www.MAREInet.com. Call 913-815-0111 for more information. Email JJ Pawlowski ad copy to info@MAREInet.com. Mail payment to MAREI, PO Box 8685, Prairie Vil- lage, KS 66208 or request an online payment for to use credit or debit card. Chartwell RealtyPage 4 MAREInet.com
  • 5. MAREI StaffKim Tucker 816-523-4400 Don Tucker 816-523-4400 Steve BurnsDirector President Audio VisualKim@MAREInet.com Don@MAREInet.com cashflowtreasures@gmail.comJohn Welchert Larry Prato Spencer CullorMeeting Ambassador Commercial Subgroup Commercial Subgroup816-268-3849 913-227-4693 913-324-5900Dan Goodwin 913-642-5218 Shelda Goodwin Scott TuckerMeeting Ambassador Meeting Ambassador Meeting AmbassadorDanGoodwin@kw.com SheldaGoodwin@kw.com STucker319@gmail.com Investment News Page 5
  • 6. Director’s Notes I am excited to announce a brand new rela- little bit south of central if we look north and tionship between MAREI and Career Educa- south. tion Systems. Many of our Realtor members For those of you who have never been there are familiar with the very professional training you will find it is between State Line Road facility that offers Realtor training. We have and Ward Parkway and 85th Street and 89th been in negotiations with them to hold not Street.. Enter the parking lot on the Ward only our monthly meetings, but also training Parkway side at about 87th street. It is just workshops. to the south of 24 Hour Fitness and they ask So while we will be in the same location in that we park in the parking garage if at all June, we will be moving our meetings to their possible. training facilities in JULY. They are located in This location also offers quite a few choices the Ward Parkway Shopping for our members to meet before the meeting Center at 8600 Ward Park- for a quick dinner at one of the many dining way, Suite 130 in Kansas City facilities in Ward Parkway Shopping Center. Missouri, which is fairly cen- . trally located. For the metro. Located just of State Line puts Kim Tucker this location in almost the ex- Director of MAREI act center via east west. It is a Career Education Systems Your Guide to Real Estate Excellence Visit www.CESKC.com To find out more about Realtor Training ClassesPage 6 MAREInet.com
  • 7. Investment News Page 7
  • 8. Assessed Value vs Market Value When working to determine the true value of a prop- conduct an exterior inspection every six years and erty the Real Estate Investor must keep in mind that attempt to speak with the owner as they look for the tax assessed value is not the same as market changes in the property such as room additions, value or the value that the home would sell for in property dimensions and general condition. They today‘s market. These two numbers are two entirely then use computer-generated sales data to ana- different values. lyze the property based on age, size, style of con- struction and replacement cost. According to the www.fiftystatesfsbo.com Once they have determined your ―fair market Market Value: the value of a home in TODAY‘S value‖ or appraised value based on this exterior market. inspection, they multiply that number by various Assessed Value: Used by taxing authorities to de- percentages for all the parts of the community that termine taxable value only. Assessed Value is not have a hand out for your property taxes. an indication of Market value For example in Johnson county a residential prop- In Johnson County in Kansas they feel market value erty currently would have an 11.5% assessment of or ―fair market value‖ is the amount that the well in- value, Commercial a 25%, and a vacant lot a formed buyer is willing to buy and the well informed 12%.. Once they have that assessed value, they seller is willing to sell in an open and competitive then multiply again by the mill levy to determine market. your tax. In Kansas, they used a county appraiser to deter- Annually your county will send you out a notice of mine ―fair market value‖. The county appraiser will value to let you know what they county thinks your Monthly Meeting Don’t miss this event! 1 PHP Attend the June MAREI Monthly Meeting to CREDITS find out steps you can take to protect your profits from the tax man. We will be discussing con- testing your tax assessment from Real Estate Taxes. Location: Sylvester Powell Jr Community Center: 6200 Mart- way in Mission Kansas (*last meeting at this location) Don Swartz Date: Tuesday June 14th: Doors open at 6:00 Managing Director Cost: Members FREE, Guests $25 at the Door or Pre-Register CBIZ MHM for $15. See more & Register online. Professional Services PHP: 1 Credit Management PHP, members only, must be pre CBIZ.com -registered through the website to receive credit.Page 8 MAREInet.com
  • 9. properties current value is for this real estate taxes on your proper-years taxes and they give you so ties and the less profit you put in speakermuch time to appeal that value. your pocket at the end of the day.All property owners have the right Flip Properties: What if you buy agendato appeal their appraised valua- and resell quickly. In some cases The June 14th Monthly MAREItion. It may be that what the ap- it may be that the property has notpraiser guessed at from the out- sold because the tax assessed meeting will host Don Swartzside is not correct, it may be that value is way off and no one is will- with CCBIZ MHM. Join us tothere have been major damages ing to take on the expense of the find out more about the processor deterioration to the property that out of whack taxes or the effort tois not visible from the outside. get them changed. You could be for Appealing your Taxes the big winner if you could buyBut there are deadlines you must  Time Frames for Appeal from the motivated seller cheap,meet to appeal your values and adjust the taxes to a correct value,  Qualifying for Reductionyou need to know what types of and then resell for a better price.proof of lower value you need to  What Information is Neededprovide at the appeal. Last, the value of any property is going to be affected by the taxes  How Long Does it TakeSome things you may want to assessed. In single family the in-have: vestor buyers are going to look at  Do I Need an Appraisal Correct figures on property de- cash flow and the owner occupant tails: square footage of all buyers are going to look at  Needed Comparable Info rooms, lot size, number of monthly mortgage payments, both affected by the real estate tax. In  When do I Need Profes- rooms, number of bedrooms, number of bathrooms. multifamily or commercial property, sional Assistance the value is a direct result of net Comparable Homes both income, which is also affected by If you own real estate for per- those the county used and the taxes assessed. sonal use or for investment or if those you feel that are similar to your property. So if you are a property owner of you are a real estate profes- any kind, for your own use or for sional who assists others, the Correct figures on comparable investment purposes, it could pay information you learn tonight properties. to find out the exact steps needed to review your tax assessed value will be invaluable. Please bring Recent Appraisal for accuracy and to appeal the any questions you may have. Signed Sales Contracts value if it is incorrect. Photos of damage if it was re- cent Repair estimates of damageReal Estate Investors need to beinformed on all of this process be-cause an incorrect valuation in thecounties favor can cost us $100and $1000 in taxes over the timewe own the property.Some things to think about.Buy and Hold: If you buy and holdreal estate for rental purposes youpay real estate taxes each andevery year. In single family, multi-family, commercial or what everyou are into, the more errors in Investment News Page 9
  • 10. Private Lending Made Simple Most people don‘t realize it, but obtaining money But that was only the beginning. After a few for real estate deals has nothing to do with sav- years I took a second step that propelled my ing money for a down payment, going to a bank, business and my life to a whole new level. In filling out an application, and waiting to be ap- 2001, when I quit my corporate job and took the proved. plunge full-time into the world of real estate, I was immediately faced with a very big problem. In fact, if you‘re going about things this way, as I It turns out that this problem was the best thing did for many years, you‘re wasting time and los- that could have happened to me. You see, with- ing money. out full-time employment, traditional lenders For me, discovering how to use private lenders weren‘t exactly eager to loan me funds. And in my real estate business has been truly life without consistently available money to fuel my altering. The amount of money I make and the real estate transactions, I had no business at all. kind of work I do each day is incredible to me. I tried everything: And not only is it possible, it‘s really very simple. If I can do it, anyone can. - Banks - Line of credit For seventeen years I languished in a full-time - Hard money lenders corporate position. I wasn‘t happy and I was - Partners barely making ends meet. I was thousands of - Credit cards dollars in debt and it was only getting worse. It wasn‘t the life I wanted. I felt that my life was just If only I had known that all of these methods, ticking away. When I sat down and really faced even if they had been eager to give me a loan, things, I knew in the end I could actually retire were complete wastes of my time! poor. Finally, about five years ago I learned a lesson Something had to be done. I‘ll never forget. I came across a foreclosure on Real estate investing came to me in the form of a $150,000 property that was going for only an infomercial at 2 a.m. on a Tuesday. The $70,000. I‘d hit the jackpot! It was almost too course piqued my interest, but the cost was good to be true. Of course I jumped at the $159. Money was so tight, I didn‘t have $159, chance to get in on this incredible deal. But I but I did have a credit card and the company didn‘t have the available funds. It‘s every real offered a 30-day money back guarantee. I held estate dealer‘s nightmare. I scrambled to the that credit card in my hand and considered the bank, to my partner. I tried to extend lines of future I wanted. Then I picked up the phone and credit. But all of this took time, and time is ex- ordered the course. It was the first step toward actly what you don‘t have with a lucrative short a brand new life and eventual wealth beyond sale like this. what I could have imagined. (Continued on page 11)Page 10 MAREInet.com
  • 11. As you can guess, I didn‘t get the It sounds a little overwhelming, Some even risk the volatile stocksale. By the time I had secured doesn‘t it? Let‘s slow down. I‘ll ex- market. The win-win reality of pri-funds, the property was sold to plain the specifics of private lend- vate lending is unparalleled.someone who had the cash ready ing, and you‘ll see for yourself how Really, you get immediate, limit-and could close within days. In this this incredible system works. less funds to invest in real estateone deal I lost a potential $60,000. opportunities at a moment‘s notice. Who are private lenders? First ofI swore then and there that this all, private lenders are everyday Your lenders get an incredible 7%would never happen to me again. people. Some are retired, some simple interest on their money.And it never did, because then I work, some have substantial in- They are secured by both a mort-discovered private lending. vestment capital, and others have gage and hazard insurance on the only a little. They may want to home. There is safety in their in-A whole new world opened to me make the most of the savings vestment because the total invest-and my investing has never been they‘ve spent their lives building, ment is never more than 70% ofthe same. Private lenders literally or perhaps they suddenly came the appraised value of the prop-provide you with your own private into money through an inheritance erty. If for some reason you wouldbank to fund your real estate or property sale. fail to repay the loan, they havedeals. Imagine: limitless funds that the value of the property to reclaimare constantly and immediately Regardless of their background, all their funds.available. Today, I have more private lenders are looking for aavailable capital than I do property safe, high-yield opportunity for Want to learn more, check out thein which to invest it. It‘s simply a their funds. I give my lenders a 6 information from Alan Cowgill, thestore of money waiting for me to to 8% return on their investment. author of this Article. Visit hismake use of it. And anyone can There‘s nothing like it anywhere. website and be sure to attend hishave this; that‘s what‘s so amaz- The incredible thing is that most workshop right here in Kansasing. It‘s like a dream come true for people don‘t know about this op- City.any serious investor. portunity. They let their hard- earned money sit in CD‘s or IRA‘s. Learn More Private Lending TrainingLearn more about Private Lending Right now, visitAlan Cowgill’s website: click here and check outhis Saturday Workshop in JulyWhere: Career Education Systems in the Ward ParkwayShopping CenterDate: Saturday July 23 : 9 am to 5pm, lunch includedDoors open and check in at 8:30Cost: Members $39 / Non Members $59 through 07/20After 7:20 Members $69 / Non Members $89PHP: 6 Credits Financing PHP, members only, must be pre-registered through the website to receive credit. Investment News Page 11
  • 12. What Scares Investors What are the reasons that investors advertise? You I would try to do it as often as I could, but the problem may say to get leads, find sellers, find buyers, or to is there‘s a disconnect because the phone rings. What- market yourself. Those are all good reasons, but the ever will I say? Am I going to sound like an idiot? I main reason an investor advertises is to get the phone hope not, but maybe I let it go to voicemail, that way I to ring. Until it rings, we don‘t know if there‘s anybody can kind of prepare myself and once I‘m prepared, I‘ll out there in the world and until we answer it we don‘t call them back and find out that Tom already bought know if we have a buyer or a seller or whatever else. the house or that some other investor already closed the deal. Let‘s imagine that your advertising is successful and the phone rings. What happens now? Don‘t say, You need to be ready to respond. Preparation meeting ―panic.‖ The information in this blog series is designed opportunity creates success. Very simple formula and it to help get you over that hurdle today that there really works. shouldn‘t be any fear when they call. Do you have fear? What kinds of things make you nerv- So many new investors will put money into advertis- ous or afraid, especially in this business? Fear, as an ing. They‘ll setup their office. They‘ll print business acronym, is really false evidence appearing real. Fear cards. They‘ll run ads. That phone will ring. They‘ll is one of those things that has been around for a really look at a strange number on their caller ID and say, long time. It‘s a very ancient and universal reaction. ―I‘m letting it go to voicemail.‖ If you sit down and fig- Every culture experiences fear. If you think about it, the ure the average cost of a quality lead, it might be fear mechanism is built into each one of us. $1,000, but if you figure the average transaction I think I‘d more accurately define fear as a sensation of should net about $27,000, how many times would you danger. I‘ve been involved in many, many, real estate spend $1,000 to make $20,000 or more? transactions and I‘ve known people involved in many, many more and I have yet to find the fatal transaction. I don‘t believe anyone has ever died from doing a real estate deal. Now, my wife said I could be the first, but it‘s not be- cause of fear or the sense of something ominous. Have you ever felt that something bad is about to happen? What bad thing could happen in our business? Some- body says, ―No?‖ That‘s probably the worst thing that can happen. This fear is usually accompanied by a host of physical symptoms and those can be really disturbing. They say the greatest fear in the world, often ahead of dying, is public speaking. Even today, I can get a few butterflies (Continued on page 13)Page 12 MAREInet.com
  • 13. before getting up in front of a group, to be abandoned.‖ Isn‘t abandonment out hunting one day and the daughterbut I look at it from the perspective of just another word for rejection? comes home to find an ax stuck in thewhat‘s the worst that can happen. You beam over the hearth. Right away she If we get rejected and feel abandoned,can laugh at me. You can laugh with begins to fret. what happens? We kind of clam upme or you can go‖ boo‖. I think I‘ll sur- and we‘re afraid to express our true What happens if Hans comes homevive. It took me many, many years to feelings about things. We have a fear and the ax loosens and falls? Hansrealize that mom was right. Sticks and of becoming intimate. Letting people could be hit on the head and killed.stones break your bones, but words, know our inner secrets. Letting people The young woman thinks of how shenot a big deal. know who we really are and that‘s a would be destitute. ―I‘d be desolate.When fear isn‘t justified by danger or problem. I‘d be lost without him,‖ she thinks.a threat, or by any kind of rational I‘ve really learned that when you‘re With that, the girl‘s mom comes incause—and you find yourself avoiding open, you‘re not only open to giving, from milking the cow. She asks hersomething because of that fear— but you‘re open to receiving. I kind of daughter what is the matter. Thethat‘s called a phobia. visualized it from the perspective of a daughter explains, ―The ax is in theIf you consider all the investors you little kid and they grab a toy and go, beam. Hans could come home fromwill meet, you will see a great many of ―Mine.‖ You ever see them do that? hunting, it could fall and hit him in thethem go to classes and focus groups. Mine! Mine! And, they hold it in. Well, head and kill him and then whereThey join organizations and buy prod- the big problem with that is if you had would we be? No food and I‘d be allucts and setup LLCs and learn all another bag full of toys, they‘re can‘t alone.‖about land trusts. But they never do a get without letting go of what they The mother joins the daughter in herdeal because they have success-a- have. They couldn‘t take another toy. despair. The two of them are sittingphobia. It‘s out there. Believe it or not. But if they have their arms open, they there in front of the fireplace cryingPeople are afraid of failure and rejec- can get all that can be given to them their eyes out when the father comestion, but they are also afraid of suc- and we‘ve got to remember that too. in from gathering the eggs. He askscess. They are afraid someone might Another fear investors encounter is the women what‘s wrong and they tellactually say ―yes.‖ fear of the unknown. Not knowing him the story. ―The ax, Hans couldAnother fear, and one I experienced what could happen is a very signifi- come home. It could fall. It could hitduring childhood, was fear of being cant fear. A good story to illustrate is him in the head.‖ They‘re so worried.judged. I grew up in one those house- the one about the farmer‘s daughter. They‘re fretting over this whole thing.holds where if you brought home a 98, Not THAT one about the farmer‘s Hans walks in 10 minutes later andthe only question that was asked was, daughter. In this one, she is married sees the three of them there crying―Did anybody get 100?‖ The 98 I got to this fellow Hans and they live with (Continued on page 14)right wasn‘t nearly as important as the her mom and dad on the farm. Hans istwo I got wrong.Fear of being judged is a real thingand if we get judged and we‘re judged Augie Byllott is a member of Pact Prosperity.harshly, that‘s going to cause emo-tional pain or embarrassment. Most of Real Estate Investors like you who get Realus are afraid of emotional pain. ―Wow, Estate Investor Students Ready for Success.if I suffer emotional pain because I They have created hands on, affordable train-was judged harshly, I‘m going to be ing programs. Find out more about PACTembarrassed. People are going to Prosperity—click here or type http://bit.ly/know and then they‘re going to aban- iNeXpD into your browser.don me. Gosh, I‘m afraid. I don‘t want Investment News Page 13
  • 14. like lunatics. ―What‘s wrong? What is forbid there‘s a strong wind. I would count, Allen gets dropped off some-going on?‖ His wife tells him, ―Darling, really look foolish. where in California with $100. Hethat ax is in the beam. You could go goes and buys a roll of quarters and But, what‘s more important? My focusover by the hearth. It could fall out of the newspaper and he sits there dial- is on helping the kid, not worryingthe beam and hit you in the head and kill ing for dollars. He ends up buying about me. Well, it‘s the same thingyou. We’d be lost without you.” some real estate before he gets to the when we‘re dealing with a seller. end of his roll of quarters.Hans replies, “You people are sick,” and We‘re trying to help somebody that‘she grabs the ax and yanks it out and got a problem. On that first deal, he only made aboutthrows it in the corner. $5,000, but let‘s say instead of making Seek to solve those problems and if 40 calls he made 50. That‘s an aver-Instead of taking action, they all worried you do that, you can provide some age of 100 a phone call, is it not?about what might happen. Fear of the un- benefits. One is peace of mind. It‘s Since then every time somebody saysknown paralyzed them. So many inves- one of our primary products. The other no, he says, ―Great. I made anothertors are like that goofy family. They is debt relief. If somebody was just $100,‖ because there‘s only so manyworry about what might happen. Will I transferred and they‘re worrying about ―no‘s‖ between a ―yes.‖ So, every timebe a failure? Will I be a success? Will I the fact that it‘s going to take six to you hear a no, there‘s a ―yes‖ gettingbe rejected? Will I be abandoned? nine months to sell their home and closer and that‘s important to under-Will I look foolish? God, don‘t judge you can solve their problem right now, stand.me because if you judge me and don‘t they might sleep a lot better. If some-like me, I‘m going to feel bad, but body‘s in foreclosure and worried Too many people take this businesswhat would happen if you did happen about ruining the rest of their credit personally. This is not a hobby. It‘s notto be successful and you did make a and you can put a deal together that a crusade. It‘s a business. Now, doton of money and you changed your stops the foreclosure and helps them you think if you go to Macy‘s and looklife. How bad would that be? move on with their life, you‘ve pro- at something that‘s on sale and vided them debt relief, haven‘t you? choose not to buy it, they‘re offended?Didn‘t we get into this business so we It‘s business. Yes, they‘d like you tocould make money? There‘s lots of How bad are those goals? How bad buy it. I‘d like to buy somebody‘sbusinesses we can make money with. are those missions? We provide solu- house. I‘d like to sell somebody aI‘m in this business because I get to tions. That‘s what we do and when house, but if they don‘t buy it or sell it,help people. I get to help people solve you think of yourself as a solution pro- it‘s not the end of the world. Remem-problems with their properties. I get to vider, you‘re going to have a very dif- ber this expression, SW-SW-SW-SW.help people who don‘t think they might ferent attitude on those fear issues. That stands for: Some will. Someever own a home, get to own a home. When I start thinking of you, I‘m not won‘t. So what? Someone‘s waiting.I provide quality housing for people. nearly as afraid as when I‘m thinkingI‘m a professional home buyer and about me and what you might think ofwith my PHP certification. me and at the end of the day, by me not being afraid, I‘m putting the onusSo, when I start walking up a driveway on you.or I get ready to get on the phone or Ianswer a phone, I recognize that my I‘m here to help you. You can acceptmission is to be helpful and helping or reject my help. It‘s not me you‘re Did you find this article helpful?people is a good thing. rejecting. It‘s the help I offer you. It‘s the help I offer you that is being Imagine getting to learn nuggetsYou want an example of how fear dis- judged. It‘s not me and when you can like this from on a regular basisappears when you are focused on kind of separate that, you have a to- from our great team. Please take ahelping people? Imagine if I saw a tally different mental picture and you moment to visit our site and signlittle kid in the street about to get hit can hear people say ―no‖ all day long. up for our blog and to find outby a car. Trouble is, I just jumped out more about PACT Prosperity—of the shower and I‘m wrapped in a There‘s a story about Robert Allen.towel. If I go running out like a ma- He‘s the guy that started with the click here or type http://bit.ly/niac, I will certainly look foolish. God book No Money Down back in the iNeXpD into your browser. early ‗80s. In one very famous ac-Page 14 MAREInet.com
  • 15. Lead Lists Pre-Notice of Default Pre-Foreclosure Affluent Consumer Free & Clear Homeowner 2% Rebate, Get Registered. Absentee Owners Instructions in the member Newly Listed Homes area of MAREInet.com. Log New Business leads in, click on Member Library Custom Consumer Leads and look for Home Depot in FREETrialWebsite.info EZ Data Group Leads the Benefits Section. FREE Gift! Who are “They” & Why did they “DO IT?” Get instant access to 3 great MAREI monitors Local FREE Bonuses. Valued at $200: Must Know RE Terms City & State Governments Glossary, Think & Grow Rich As well as Nationally. See housing stats online Book , and Training eCourse. www.KCRAR.com Be sure to register for our Resources Tab newsletter for important Heartland MLS Statistics updates& calls to action. Track Foreclosures Complete Details Including AddressesBe sure to use your discountcard for savings of up to 40% Jackson, Clay, Platteoff regular pricing in all stores EZ Data Group Foreclosurenationwide. This is all part ofa NATIONAL Contractor Ac-count for awesome price sav-ings! Card is in your mem- MAREIandCC.infobership package! Investment News Page 15
  • 16. Creative Financing Or Mortgage Fraud? I recently came across a post on several social media home owner lives in the house for 5 years. If they sites that asked essentially the same thing. ―Is a for- sell before the 5 years all or part must be paid givable second mortgage, legal.‖ The funny thing is back. The key here is that the first mortgage knows that when I was a brand new investor just getting the 2nd is forgivable . . . completely legal. started I asked the same question in a deal being pre- Now lets look at what I think the Investor asking the sented to me. The lender and the attorney handling question was getting at. I want to sell my house. I the closing both explained that the lender would lend a have a buyer who can get qualified for an 90% loan percentage of the purchase price and the other per- and the first mortgage says they have to have 10% centage the seller would take back a 2nd mortgage. down. So I raise my price to sell to them and take After it was closed, some given amount of time, the the 10% back as a 2nd mortgage. I dont care if they 2nd mortgage would be torn up and not need to paid. pay me a dime and we have a gentlemans agree- My question ―Is that legal‖ and the attorney assured ment that they dont have to pay me any of that me that it was, we just needed to make sure that the 2nd. They get the loan, they move in, the dont pay borrower received a 1099 for the forgiven amount. me. The post I saw said that she had received the re- All well and good if they pay me and dont default on sponse that it has been done for decades, everyone the 1st mortgage. They default, the first lender starts does it and it is fine. Which may have been true . . . . looking at the loan and find out that the 2nd mortgage then the foreclosure crisis hit. Now you need to un- was a sham, someone is going to get fined and or derstand that everyone is no longer ―doing it‖ because go to jail. it is Mortgage Fraud in most cases. All well and good if you don‘t get caught and get So what‘s the difference. away with it, great. But then you need to sell the next If you have a forgivable second, in and of itself, not house, and the next house, sort of like a junkie need- illegal at all, just as the attorney above said. As long ing to get their fix. You need to make your profit so as the whole thing from 2nd mortgage to how it will be you can eat right . . . so you did a fraudulent silent forgiven needs to be documented and disclosed in the second once and nothing happened, so lets do it purchase contract. Then all that information disclosed again, then again. Next thing you know you are on in the purchase contract is provided to the lender who the MortgageFraudBlog and being fitted for a is making the first mortgage. If they know the 2nd is stripped, pink jump suit. imaginary money that does not need to be paid back So no - silent forgivable seconds are not legal unless and still make the loan, great. They probably will not fully disclosed in the purchase contract. make the loan. To find out more about mortgage fraud, check out the For example, the MHDC loan of down payment or MortgageFraudBlog and read about some of the closing cost money is a forgivable 2nd. It is included scams that people have came up with and been con- on the contract and the 1st itself goes though the victed. MHDC program. The loan is fully forgivable if thePage 16 MAREInet.com
  • 17. Build your Business accurate Accurate Closings: Smooth, Timely, Professional. Title Services Provided for:  FSBO, Wholesale, & REO Transactions  New Construction Closings  Commercial Purchases and Refinance  All Types of Loan Closings  1031 Exchanges Consider MAREI  FHA, VA, USDA, Conventional Loans, Upgrading to a Internships and Hard Money Loan Closings  Refinance & Reverse Mortgages Business Membership  Doc Prep, Prelim HUDS, Curing Issues Managing All the great benefits  Short Sale Closing & Assistance Websites  100 Years of Combined Service! you have now as a member Booking www.AccurateTitleCo.com Events 913-338-0100 phone Ad in this newsletter that we email out to Selling over 3000 people and Advertising post in multiple online Graphic locations. Design Ad on the Vendor Direc- tory where almost 4000 Targeted Visitors stop by Email each month info@MAREInet.com Easy to Use / Customizable And as an added bonus  Multiple Templates to Choose in 2011, we are includ-  PreFilled Text or Write Your Own ing: 3 Vendor Tables,  Unlimited Pages as Needed 12 Blog Posts (your pro-  Properties Descriptions & Photos vide), and article space  Tools to Build your Buyer’s List in the newsletter (you  Data Collection Tools provide)  Your Own Domain  Keyword Rich for SEOTo Join or Upgrade,please call 913-815- FREE Site / Hosting $19.95 Month0111 or emailinfo@MAREInet.com. www.MAREInet.com/360REIStart Investment News Page 17
  • 18. Investors what would your business and your prof- According to the New York times, last year in its look like if the banks required a 20% down pay- 2010, more than 19% of all residential mortgages ment from all home buyers? What if they could no were made using the FHA loans that require 3.5% longer get a 30-year mortgage? What if they down. According to a Washington‘s Blog post , could not deduct the interest on those mortgages, Fannie Mae and Freddie Mac, that typically re- if they were able to secure a loan? quire 5 to 15% down payment account for another 71% of residential home loans. Add all of these Our Senators and Representatives are deliberat- up and we have 91% of all residential home loans ing bills and concepts that will have a huge impact that are backed in some way by the government on the residential and commercial real estate mar- and require less than 20% down. Putting in a kets as well as on the nation‘s economy as a 20% down requirement, would bring much of the whole. residential home sales to a screeching halt. Mortgage Interest Deduction: Proposals to re- National Flood Insurance Program: This one is duce and even eliminate the Mortgage Interest not quite the headline grabbing item, but this pro- Deduction on our Taxes to help decrease the defi- gram needs to be reauthorized as 5.6 million prop- cit. Here at MAREI as well with the National As- erty owners rely on this program in communities sociation of Realtors, we feel that this could put a where flood insurance is required to obtain a damper on the housing market which could further home loan. slow down the economic recovery. To find out more online search for ―Mortgage Interest Deduc- So what can you do? tion or MID. 1. Do a little research and find out the facts and Secondary Mortgage Market: They are debating form your own opinions. Discuss them with how Fannie Mae and Freddie Mac will look after a friends and colleagues. Get the word out. restructuring. With out their presence or one like Share on social media. them in the secondary market all our loans would 2. If you are a Realtor or even if you are not, visit need to be left to private lenders. In essence, it www.RealtorActionCenter.com and sign up to would reduce the availability of mortgages and stay up to date with these issues and to re- quite possibly end the 30-year mortgage and in- ceive Calls to Action as they are sent out. crease interest rates and settlement costs. To These emailed Calls to Action include an auto- find out more look on line for ―Government Spon- mated link for you to use in notifying your sored Enterprise or GSE. Senators and Representatives. Raising Down Payment Requirements to 20%: 3. Take the time to personally email, call, or write The belief seems to be that low down payments your representatives so they know your inter- were the cause of the mortgage crisis. It is our est in the housing market and keeping the re- belief that much of the mortgage crisis was covery going. caused by questionable loans with questionable lending criteria, not quality loans, to qualified folks.Page 18 MAREInet.com
  • 19. TE-TEE LIGHT ELECTRICAL SERVICES Keeping you ―In-Powered‖ with “Flexible rehab options Superior Electrical Service! and purchase financing for  FREE Estimates qualified investors!  FREE Consultations on Non-Emergency Ann Wilkinson Vice President  24-hour Same Day Emergency Service Mortgage Loan Production 12501 Antioch Rd Licensed, Insured, Bonded Overland Park, KS 66213 Serving Kansas & Missouri Ph: (913) 402-1500 Fax: (913) 402-0673 AnnW@ArgentineFed.com George Z. Bai, Sr. - Owner www.ArgentineFed.com Office (816) 356-1870 Cell (816) 210-4710 TeTeeLight@gmail.comFor Investors By Investors Asset ProtectionIn this market, you want an agent on your Insurance Agency side that has the knowledge, the ability, www.REOIns.com the EXPERIENCE, and the resources to help you! 877-752-2742 Realty Resource 115 E Gregory, KCMO Real Estate Owned / Forced Placement 816-523-4400 For Investors & Finance Institutions www.RealtyResourceKC.comInvestment News Page 19
  • 20. TRAINING Visit www.MAREIU.com to check out the current and upcoming trainers that you can learn from right now or any time you can fit it into your schedule with our Online Training. Special Right now. Register for access to 12 FREE Videos from our experts . . . Over 2 hours of quality training Current Courses Available Now  REOs and Lease Options  Creative Financing  Auctions & Foreclosures  Government Grant Money  Automated Investment  Peak Performance Training Calendar We have a packed training calendar for June and July:  Constant Contact Webinars for those looking to ramp up their Online Marketing  Realtor Training Classes at Career Education Systems that are open to non-Realtors  This Months Meeting: Appealing your Real Estate Taxes  Next Months Meeting: Life After Short Sale, Foreclosure, Bankruptcy. Reviving Credit  Next Month Training: Live Saturday Workshop: Private Lending See page 23 & 24 and visit www.MAREInet.com and click on CalendarPage 20 MAREInet.com
  • 21. More Information . . . More Confidence Do the math. Your vacancy is costing you every day. Fill your vacancy faster and save money More Profits with Rentals.com! Tenant Screening Discounts for MAREI Members: Pre Employment Screening Receive 20% off all Regular Contractor Screening Priced Advertising. Log into Collection Services Member’s Area, click on Member Discounts for MAREI Members Discounts and look for MAREI’s Discount code! www.AAAScreening.com 816-436-0085 Do you have a house you need to sell? A wholesale“Presentation is Everything!” or Assignment you need an end buyer for? We are looking for homes to Rehab and Sell to First Time Home Buyers. Please add us to your Buyer List. Parameters: Canyon-Stone.com  After Repair Value $120,000 to $180,000  3-4 Bedroom, 1.5+ Bath 550 E. 56 Highway, Suite B  Basement & Garage Preferred Olathe, KS, 66061  Like Post 1978, but will consider older Phone: (913) 254-9300  Cash Buyers, no Appraisals or Loan Qualification Fax: (913) 254-9301 info@canyon-stone.com kcmoHomeBuyer.comInvestment News Page 21
  • 22. June 7 Webinar Realtor U: How to become a marketing ex- pert and have your phone ring off the hook June 8 Networking Commercial Investors Networking Group meets every other Wednesday June 9 Webinar Realtor U: Understanding & Applying theCALENDAR Details, Times, Locations, Cost & Registration at www.MAREInet.com June 11 Community Uniform Appraisal Dataset Habitat for Humanity Restore: Donation Days, on Saturdays in June June 12 Networking Lee‘s Summit Investors meet for a network- ing breakfast the 2nd Sunday of the month June 13 Deadline Deadline for Reserving your Vendor Table, Reserve online or email info@MAREInet.com if you have prepaid tables to use. June 14th Meeting Monthly Meeting: Networking from 6 to 7. Announcements and deal share 7:30. Pres- entation at 7:30: Appealing Your Taxes. Last meeting at Sylvester Powell June 14th Webinar Realtor U: Marketing with Facebook: Page Optimization Strategies June 15th Networking Northland Investors Quarterly Networking Lunch by Metro North Mall June 15th Webinar Constant Contact: Creating Marketing Emails June 15 Other Group KCIG monthly meeting - Networking at Fox and Hound June 15th Realtor www.CESKC.com Two Day ABR Training Training Course. Save $100 each if two people regis- ter together. June 17th Realtor www.CESKC.com—Foreclosures and Short Training Sales, applies to SFR certification. June 18th Workshop JJ‘s Saturday Workshop: Deal Evaluation June 20th Realtor www.CESKC.com 6 Day Missouri Broker Pre Training -License. June 20th Realtor www.CESKC.com 4 Day Kansas Broker Pre- Training License June 21 Realtor www.CESKC.com 3 Day Missouri Pre Li- Training cense Practice Course June 22nd Networking Commercial Investors Networking Group meets every other WednesdayPage 22 MAREInet.com
  • 23. June 23rd Webinar Constant Contact: Newsletter Makeover Networking & EducationJune 23 Other Group Landlords of Eastern Jackson County MeetsJune 24 Webinar Constant Contact: Growing your list using text messagingJune 25th Community Habitat for Humanity Restore: Donation Details, Times, Locations, Cost & Registration at www.MAREInet.com Days, on Saturdays in JuneJune 27th Realtor Www.CESKC.com 1031 Exchanges, Realtor Training Training. Non-Realtors WelcomeJune 28th Webinar Realtor U: The Proven Buyer Listing SystemJune 28th Realtor www.CESKC.com Commercial Leasing TrainingJune 28th Realtor www.CESKC.com Commercial Lawsuits TrainingJuly 2nd Community Habitat for Humanity Restore: Donation Days, on Saturdays in July July 5th Realtor www.CESKC.com 4 Day Kansas Pre-License Training Practice CourseJuly 2nd Community Habitat for Humanity Restore: Donation Days, on Saturdays in July July 8th Networking Commercial Investors Networking Group meets every other WednesdayJuly 10th Networking Lee‘s Summit Investors meet for a network- ing breakfast the 2nd Sunday of the monthJuly 11th Deadline Deadline for Reserving your Vendor Table, Reserve online or email info@MAREInet.com if you have prepaid tables to use.July 12th Meeting Monthly Meeting: Networking from 6 to 7. Announcements and deal share 7:30. Pres- entation at 7:30: Topic to be determined. First Meeting at Career Education SystemsJuly 12th Webinar Realtor U: How to Go from 0-30 Listings in 30 daysInvestment News Page 23
  • 24. Classifieds Properties for Do you have properties for sale that other real estate investors might be interested in? We have a great tool for our members to utilize . . . . . . . . . . . . . . . . Our Classified Section. So why would you want to post your properties here?  On the public side of our page, visitors can find a button to see the properties for sale from our members.   We publish the properties listed in our classifieds in our monthly newsletter. See the page 25 for the most recent.  We also email out newly properties in our weekly summary that we send out at least 2 times a month. What are the Rules:  First you must either own the property, have it under a valid contract to purchase, or have a valid listing agreement.  Include your name, phone, and if this is a Realtor Listing, your company name.  Include the property address, basic details, and a price. If we dont know where it is or what you are asking for it. We can‘t republish in the Newsletter or Summary. To find out more about tools found in the MAREI members area, log into the member‘s only section today. Then click on Member Discounts and download the latest version of the Mem- ber Package for step by step instructions on how to post a house in the classified section as well as how many of the other member only features work, plus all our discounts and tools available. We update this every few months, so check back.Page 24 MAREInet.com
  • 25. See all properties on the classified page on MAREInet.com. Including full details, photos, and links for more information. 43 Postings in Total.Offered As Address City Price Bed/Bath Contact PhoneWholesale None Given Grandview, MO $49,900 3/2 Ryan Walls 219-864-1788Fixer 705 E 60th Kansas City, MO $68,000 2/1 Maggie Sheehan 816-444-1950Rental 3347 Askew Ave Kansas City, MO $15,750 Christoph Becker 816-419-1165Rental 3722 Agnes Kansas City, MO $26,500 Christoph Becker 816-419-1165Fixer 5137 Olive Kansas City, MO $8,450 2/1 Christoph Becker 816-419-1165Fixer 3914 Norton Kansas City, MO $10,000 Christoph Becker 816-419-1165Rentals/ 1810 & 1812 E Kansas City, MO $39,000 2 Christoph Becker 816-419-1165Short Sale 70th ST HousesFixer 6309 E 149th St Grandview, MO $25,000 4/2 Bilal Hazziez 816-686-5804Turn Key 6 Houses Kansas City $260,000 Assorted Christoph Becker 816-419-1165Commer- N Scott Belton Mo $175,000 Jason Dean 913-498-8100cialRetail / Of- Downtown Lees Summit $1.5 M Jason Dean 913-498-8100ficeRental 3619 Monroe Kansas City $15,500 Christoph Becker 816-419-1165Land 5 Acres Lake Ozarks Owner Fi- Stephen Sum- 816-350-7200 nance mersRentals 110 & 407 Belton, MO $126,000 Sherri Lidsey 913-579-7657 Hawtorn eachRentals 309 Hill St Belton, MO $29,500 Christoph Becker 816-419-1165Fixer 850 Shawnee Rd Kansas City, KS $19,500 3/1 Bemate Bom- 913-735-9997 bomaFixer 2631 Montgall Kansas City, MO $15,500 Christoph Becker 816-419-1165Rental 3928 Highland Kansas City, MO $24,500 Christoph Becker 816-419-1165Fixer 9909 Wheeling Kansas City, MO $33,500 Christoph Becker 816-419-1165 Investment News Page 25
  • 26. Foundations 5 Tips for Inspection Foundation Inspector 101 - 5 tips for inspecting virtually the same. Here are the 5 basic things a residential foundation. that I look for when I inspect a foundation for a The vast majority of residential foundations in potential purchase. the Kansas City area are of three types of mate- 1. Wall Cracks – Looking for cracks may be rials but all share similar characteristics with re- obvious but there are cracks which are not a gard to potential problems that are expensive to problem and some very small ones that indi- fix. Stone foundations are typical in many older cate a potentially big expense. Rule of neighborhood in homes built before 1940. From thumb; several small cracks in the same the 1940‘s concrete and concrete block founda- area are usually worse than one larger one. tions became the norm as labor became more Numerous small cracks indicate more se- expensive and ‗ready mixed‘ concrete allowed vere movement. In concrete foundation builders to have concrete delivered to the job walls a small (less than 1/8‖) vertical crack is rather than mixed onsite. In the 50‘s and 60‘s usually caused when the concrete is curing. concrete block foundations were used almost As the concrete cures it shrinks resulting in exclusively by some builders including J.C. small vertical cracks. These are usually 4‘ or Nichols with much of Prairie Village having a more feet apart and do not show any water block basement. By 1970 most building was leakage through them. These are normal done with poured concrete basement walls. and pose no significant issues. In block and In general the same problems occur with each stone walls a vertical or stair-stepped crack type of foundation and the visual inspection is indicates wall movement and/or settling. Sometimes these cracks follow the mortar joints of the block or stone wall or they may crack the block or stone. In either case they indicate movement and potential problems. A diagonal crack starting at a wall corner or at a basement window indicates that the wall is trying to move inwards. This can hap- pen to any type of wall. I have seen several concrete walls that have actually moved in enough that it caused the steel center sup- port beam to break out the concrete wall on the outside and stick through. This usually is caused by the type of soil we have here in the area. Our soil which has high clay con- tent expands when it gets wet and contracts when it dries out. When dry, the clay shrinks, gets powdery and drops down into the gap around the foundation wall. When it (Continued on page 27)Page 26 MAREInet.com
  • 27. gets wet, it expands and wood at the base of the stairs, will try to hide a defect. I have pushes the wall inward. This moldy smells, or newer con- moved a wheelbarrow and a cycle repeated over many crete poured around the inte- concrete stepping stone, both years can destroy a wall. I rior perimeter of the basement. leaned against an outside wall, have seen a 6‖ thick concrete Water stains that are horizon- only to discover a steel sup- wall pushed in nearly 1 foot. tal indicate standing water. port beam that had pushed By industry standards a wall Several of these lines indicate through the leaning wall and a should not lean in by more multiple occurrences. Vertical major crack visible on the out- than 1/3 it‘s thickness in 8 feet. water stains indicate seepage side but behind a finished wall More than that and the walls through cracks or deteriorated inside. I am also aware of a are considered to be not struc- mortar in block or stone base- false wall being built to hide a turally sound. Most concrete ments. Newer concrete around crumbled foundation wall. basement walls will be 6‖ thick the perimeter of the floor indi- 5. If there is a defect, the seller so any more than 2‖ out of cates drain tile may have been has to disclose it – And the plumb for an 8‘ wall will be installed. A white or off-white check is in the mail! Many considered not structurally chalky substance on the walls properties purchased by inves- sound. Get out the checkbook! and/or floors indicates a damp tors are distressed properties soil condition which dissolves2. Floor Cracks – Most base- and may be sold ―as is.‖ To the minerals in the block or ment floors in this area are that end, do your homework. concrete and when the mois- concrete and most will show Foundation repairs are usually ture evaporates, it leaves the some cracks in them. Cracks expensive. In most cases you chalky deposits behind. Look in the floor that run parallel to can look at a foundation in 5- for pallets or nothing set di- the wall indicate that the whole 10 minutes and determine its rectly on the floor. This usually foundation is settling. This overall condition. A foundation means that the floor gets wet. could be due to inadequate problem is only a big problem Note that many old homes with footings which are fairly com- if you don‘t know about it. stone basements do get wet mon in old homes, improper With some knowledge the and the owners just live with it. compaction of the fill dirt under foundation problem becomes the footing, or frost heave 4. Moving On – If the floors and/ either a decision to walk away caused by a footing that is not or walls have had repairs, look or to negotiation. deep enough to go below the for different colors or textures. 6. Bonus Information – In my freeze line. Even if the house It is not unusual for a founda- experience, if the seller is pre- settles evenly it can still cause tion to have some sealants sent and is following you problems. Broken pipes, doors added to seal small cracks but around talking about what they and windows that stick, etc. numerous colors and textures have done or what they were can happen as the floor stays indicate on ongoing problem going to do and then suddenly in place but the house is that will probably not go away disappears, start looking slowly sinking around it. If it on its own. I am also leery of around very carefully. There is settles unevenly it can cause fresh paint, paneling, or items probably something that you walls to crack or even buckle. that look to be out of place. It‘s need to see and they don‘t Some of you may remember true that some people will try want to look you in the eye the houses that collapsed in to make home sweet home when you find it. South Overland Park several look better but just as many years ago. Unfortunately the only way to fix this problem is to install piers to support the existing foundation or replace it completely. It can be done but either way it is an expensive proposition.3. Indoor swimming pool or basement? – Look for water stains on the walls, rotted Investment News Page 27
  • 28. membershipWhat makes MAREI Different?You have a lot of choices in Kansas City for Real Estate and Landlord Groups. There are many rea-sons why MAREI is different, unique and better for you than other groups in the area. MAREI OthersMonthly MeetingsSaturday Training SeminarsMonthly Webinars and Recorded EventsMeet Local VendorsNational SpeakersDeal Makers Quick Pitch (Haves and Wants)Local Market Updates (at Meetings and Oline)Heavy Emphasis on NetworkingVery Active in Social MediaRobust Monthly NewsletterBlacklist of Undesirable SpeakersRigorous Vetting ProcessMember Focused MindsetREIA Leaders Who Invest Full TimeRobust Member Benefits ManualState of the Art Member & Guest WebsiteActive in National REIAActive in Legislative Efforts to Protect Our IndustryPacked Member Resource Pages & Online LibraryNon-Stop Sales PitchGroup Leader FocusedPoorly Run, Poorly Organized Meeting