The RE Investment News is the monthly newsletter for Mid-America Association of Real Estate Investors. This month, Health Care, Self Directed Health Savings Accounts, Subject To Investing Examples, Active vs Passive Investing Strategies, and Your Network is your Networth.

1. RE
NOVEMBER 2017
T H I S I S S U E
Insurance Options for 2018
MAREI Member Benefits for 2018
Self Directed Health Savings Accounts
Subejct To Investing, Examples
Active Vs Passive Investing Strategies
Your Network is your Networth
R E A L E S T A T E N E W S
Seller Financing and HR 1360
The GOP Tax Plan
Rental Licensing & Inspections in
Kansas City Missouri
M A R E I . O R G
ST LOUIS
INVESTOR
EDWARD O'DANIEL
INVESTING SUBJECT TO - NOVEMBER 14TH
N E W S L E T T E R O F M I D - A M E R I C A A S S O C I A T I O N
O F R E A L E S T A T E I N V E S T O R S
N E W S
INVESTMENT

2. An Insurance Company for Real Estate Professionals
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for their belongings, including valuable items. You are listed as Additional Interest on their
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3. You will find a list of other groups complete with links to details that
meet through out the Kansas City Metro area listed at
MAREI.org/Calendar/Other-Groups
NOV MTG
FROM OTHER GROUPS >
THE CALENDAR
M A R E I . O R G / C A L E N D A R
See full day
workshop
page 5
INVESTING SUBJECT TO
WITH EDWARD O'DANIEL
NETWORKING
D E A L T A B L E &
B U S I N E S S C A R D
E X C H A N G E
One of the key benefits of attending the monthly meeting from 6 pm to 7
pm is to meet with each of the vendors in the vendor hall and to network
with others. We invite all Members to bring their real estate investment
deal flyers of properties for sales, deals looking for partners or other
investment opportunities to the deal table. We do ask that you include your
name and contact information. Also bring your business cards for the card
exchange. Both tables are in the premeeting space outside of the meeting
room.
Learn how to buy properties with little to no money by purchasing subject
to the seller's existing financing. This is a great tool for buy and hold
investors to have in their tool box to build their portfolio and for wholesalers
and flippers to acquire property and take posession before selling.
Join us Tuesday, November 14th when we welcome special guest St Louis
Real Estate Investor, Property Manager and Investing Coach Edward
O'Daniel,
Monthly meetings are held at the Holiday Inn at 8787 Reeder Road,
Overland Park, KS. MAREI Members & First Time Guests who Pre-Register
at MAREI.org attend free - all others pay $25 at the door or $15 online.
NETWORKING FOR
TOYS FOR TOTS
DECEMBER
Bring a new unwrapped toy or gift card to the December meeting and join us for
facilitated networking. event so you can meet new people. Join us on Tuesday,
December 12th and bring your toy - this meeting is free to everyone who brings
something for Toys for Tots or shows us an online Donation in the past 30 days.
03RE INVESTMENT NEWS
Mailing Address:
6709 W 119th #332
Overland Park, KS 66209
Phone: 913-815-0111
Web: MAREI.org
Web: MAREIMember.com
Email: Kim@MAREI.org
Views and advertising expressed in the
RE Investment News are not necessarily
endorsed by Mid-America Association of
Real Estate Investors. The information
contained within should not be
construed as a recommendation for any
course of action regarding financial,
legal, or accounting maters by Mid-
America Association of REal Estate
Investors.
Email to inquire about advertising
oportunties or membership.

4. 04 RE INVESTMENT NEWS WWW.MAREI.ORG
THE GOP TAX PLAN
real
estate
news
recess. Some of the policy highlights include:
The Seller Finance Coalition formed several years
ago by several note investors including Eddie Speed
at NoteSchool has been working hard to change the
Seller Finance Laws so that seller financing for
investors is not quite so tough. They have a bill in
the house - HR1360 with so far 20 co-sponsors.
They are hoping to add a few more new sponsors
over the next few weeks and that the House
Financial Services Committee will make a move on
their bill.
We urge you to learn more about these efforts and
to reach out to your own Legislators. Please visit
www.SellerFinanceCoalition.com
SELLER FINANCE & HR 1360
The new GOP Tax Plan released on November 2nd
will be debated on in the House next week but the
Senate will inevitably draft a different tax plan or
change some of the key points. The Republicans
want to have it on the President’s desk by Christmas
Reduced number of tax rate brackets from seven
to four: 0%, 12%, 25%, 35%, and there continues
to be the 39.6% rate for very high-income
individuals.
Significantly increases the standard deduction
from $6,350 to $12,000 for individuals and
$12,700 to $24,000.
Eliminates special-interest deductions, so now
you can file your taxes on a postcard.
Expands the Child Tax Credit from $1,000 to
$1,600.
Continues the deduction for charitable
contributions.
Continues to allow Americans to write off state
and local property taxes, up to $10,000.
Repeals the Alternative Minimum Tax.
Doubles the exemption of the Estate Tax, and
repealing it after just six years.
Lowers the Corporate tax rate to 20%, down from
35%.
Reduces the tax rate on the hard-earned
business income of Main Street job creators to
no more than 25% so Main Street tax relief goes
to the local job creators it was designed to help

5. 004RE INVESTMENT NEWS
the most.
Learn more by watching the Podcast on Roll Call at
https://www.rollcall.com/news/podcasts/podcast-
gop-tax-plan-unpacked
Rental Licensing and Interior Inspections are back
in the news this week.
Back in August and September, MAREI and other
groups across the metro asked you to attend
meetings and call city council people to get the
city's proposed ordinance tabled. We were
successful but they said to expect this to come
back for the April Ballot.
This past week a tenant advocacy group, KC
Regional Equity Network held a training session to
teach their members how to collect signatures on
their petition drive to get their Healthy Homes
Ordinance on the Ballot in April 2018.
They are pushing to require all rental units be
registered for a small fee and for these units to be
inspected based on complaints, we are not sure
complaints from who as well as random
inspections.
We finally figured out that the city and the
advocacy groups really are out to get rid of the low-
end rental housing in Kansas City as bills like this
will cause rent increases across the board and as
the low-end rentals are updated and upgraded,
rents are going to go up.
We don't really see anyway from stopping this from
going on the ballot in April, so landlords start
educating your tenants now. Do your math and
KANSAS CITY MISSOURI
RENTAL LICENSING AND
INTERIOR INSPECTIONS
05
05
Allows businesses to immediately write off the
cost of new equipment.
Allows the ability of small businesses to write
off the interest on loans.
let them know in the properties that need no
updates and upgrades what they can expect in rent
increases with the new ordinances. Educate them
on their 4th Amendment Rights. And ask them to
go vote.
If you have homes you believe will have multiple
violations, start the repairs and upgrades now if
you can find the funds to get them done and start
increasing rents as the market will allow. If
however, it does not make financial sense to make
repairs, start thinking about what you might do with
the property: sell it, rehab and flip it, abandon to
the bank or abandon to the city tax sale. All viable
options.
While we probably can't stop the licensing and
inspections, MAREI is working with the Missouri
Property Owners Association to change state law
requiring to allow our Tenants the right to say yes
or no to an interior inspection and to ask the
inspector to obtain a warrant.
Learn more at MissouriPOA.org

6. INSURANCE OPTIONSRESEARCHED BY A NON INDUSTRY PERSON
by Kim Tucker
Kim Tucker here, real estate investor. I
was happily living my life with a Blue
Cross group policy in Kansas City that I
had for our family for many years.
Obama Care came and I kept my old
plan, not sure if it met the
requirements or not, but it was all
good.
Every year it went up about $100 and
in 2016 we were at about $960 a
month in premiums. We moved to the
Lake of the Ozarks and they canceled
our insurance and when we tried to get
new, we had one choice through the
HealthCare.gov that was $1480 a
month. It came with a $5000
deductible each for my husband and
myself, didn’t cover a lot of things, but
it was insurance. Fast forward to now
and our policy is yet again being
canceled, but we are in luck, there is a
replacement policy, deductible goes up
a bit, premiums go up to $1860 a
My first option is to skip the insurance
altogether and put the $1800 a month
into an account to cover my own
expenses and hope nothing bad
happens. We can all do that and from
what I understand, if you do not get
insurance you have to pay a penalty.
This penalty for the tax year 2017 is
2.5% of your total household adjusted
gross income or $695 per adult and
$347.50 per child up to a maximum of
$2,085. They expect this to increase
in 2018, but they have not yet been
announced.
I reached out to my CPA and he said
based on my income, that if I would
have skipped the insurance, I would
have to pay a penalty of $695 for me
and $695 for my husband for a total
penalty of $1390. I am pretty sure
that this year if I would have paid the
$1480 into a savings account, paid the
penalty and paid cash for all medical
expenses, I would have about $10,000
in that account right now.
month and no out of network doctors
unless it’s an emergency and where I
live, if you want to see a specialist, you
have to go to out of network.
I almost forgot the awesome
prescription coverage. I can use my
insurance to buy prescriptions, however,
they are cheaper if we pay cash.
So now I have to make some decisions
and weigh some options to decide what
to do and I have been conducting some
research on Facebook and I have
learned a few things that I thought might
help a member or two.
So if you are like me and getting screwed
over by Obama Care, here are some
things I have learned. Please note I am
not an expert and I don’t speak
insurance, so please triple check
everything with your own CPA and your
own insurance providers.
Go Without and Pay the Penalty
06 RE INVESTMENT NEWS WWW.MAREI.ORG

7. 08
One of the people providing insurance
said to look to the Obama Care guidelines
and penalty exemptions. There is one
exemption that I qualify for: “The lowest-
priced coverage available to you, through
either a Marketplace or job-based plan,
would cost more than 8.165% of your
household income.” If you do the math on
an $1860 premium I would need to make
more than $273,00 a year to have to pay
the premium, at least for 2017. So I am
thinking I would be exempt from having to
pay the penalty and maybe you would too,
but I could be wrong.
But what if something horrible happened,
someone got cancer or needed surgery
and then we would be screwed even
more!
Health Savings Accounts
I could go out and get a high deductible
insurance plan, which I already have and
then every year contribute up to the
maximum amount of $2,400 for one
person or $6,750 for a family in 2017 into
this account tax-free. This is in addition to
paying the Health Insurance Premiums.
Then out of this account, we could pay
copays and prescriptions and the like.
What would be very financial sound
according to my Self Directed Guru
Friends would be to open this account
where I have my Self Directed IRA and
take this money and use it to invest in real
estate and mortgage notes and not touch
it. And grow this money tax-free for some
future date to use it for medical expenses.
So if at all possible, we need to start one
now for that emergency fund for the
future. But for now, other than reducing
my taxable income, this does not seem to
be my solution. My insurance would still
cost $1860 a month.
COOP Plans
In my research, I spoke with several
people who offered coop plans that are
not quite an insurance. You can research
As I look at these requirements, I and
many of the other men and women
reading this do not need all those
above items. And guess what, if you
find the right person, they will give
you a quote that is WAYYYY cheaper
than what you are looking at, but
they don’t quite meet the Obama
Care Guide Lines.
I received a quote from Laura
Peretic, at a private insurance firm
here at the lake for United Health
Care that was offering similar health
care as my Obama Care Plan for
$792.50 which after 12 months and
my $1380 penalty, would cost me
$10,890, you do the math.
So, this week I need to make my
choices and cancel my Obama Care
Coverage. I am pretty sure that if I go
with one of the last two options
costing around $10,000 annually, I
could then take the leftover money
and contribute to an HSA tax-free.
Then flip one house a year in my HSA
or lend it out and not touch it and
when that emergency comes up in 5
to 10 years, have tax free money to
pay for it.
I would love to get feedback from
coverage providers and other small
business owners to see what they are
doing.
The People I consulted for this
article:
Laura Peretic –
CapricornInsuurance.net
(573) 207-8187
Kurt Jackson –
KJFinancialOnline.com
(816) 582-5532
Eldon Becker –
EversCPAs.com
(573) 348-4141
these but the dumbed down explanation
is that is a group of people who have
banded together through a company.
Everyone pays their “premiums” into the
coop and then when you have a bill, the
coop pays the bill in a similar fashion to
regular health insurance.
One company that was referred to me
here was Liberty Health Share and you
can get a free decision guide from their
website.
Alternative Plans
I spoke to several people who offer these
plans. I am not an expert and would say
talk to these folks, but these are
packages of plans from several different
sources that do much the same thing as
insurance, but they are bundling several
different plans to get you the coverage
you need. Quite often these plans pay a
specific dollar amount for different items
and you or their service will negotiate a
cash rate with the Doctor. And the cash
rate might be a bit higher, a bit lower or
right at what the plan pays.
I received quoted prices from Kurt
Jackson with KF Financial in Liberty that
was between $600 and $800 a month
depending on if I wanted the extra
coverage to make it Obama Care
Compliant or if I wanted to go with the
bare minimum and possibly pay the
$1380 annual penalty. He does not think
I would have to pay the penalty.
Regular Non-Obama Care Compliant
Plans
Now this one I am still wrapping my head
around, but here is how I understand it.
When we go to all those websites to get
a quote for insurance, they only provide
us quotes that meet Qualified Health
Plan guidelines that establish limits
about deductibles, copays, out of
pockets, as well as no pre-existing
conditions, pediatric and birth control
and breastfeeding coverage.
07RE INVESTMENT NEWS • PAGE

8. MEMBER
CONNECTIONS
Monthly Meetings
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DEVELOPMENT
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SERVICES
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ADVOCACY
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9. MONEY SAVING
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To access all of your member benefits, please log
into www.MAREIMember.com and download the
Member Benefits Guide.
The Member Benefits Guide highlights all the tools
and services available to help you become more
profitable, professional and successful as a real
estate entrepreneur. You local benefits, paired
with those offered by Missouri Property Owners
Association and National REIA provide you with a
powerful set of tools to build a solid real estate
investing business or to grow your real estate
related service business or small business.
If you need any assistance with any of the member
benefits, be sure to email kim@MAREI.org.
MEMBER
COMMUNICATION
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ONLINE
CONNECTIONS
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real-estate-investors
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STARTER INVESTOR
WEBSITES
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10. 10 RE INVESTMENT NEWS WWW.MAREI.ORG
SELF DIRECTED HEALTH
SAVINGS ACCOUNTby MAREI Staff
A health savings account (HSA) is a
tax-advantaged medical savings
account available to taxpayers in the
United States who are enrolled in a
high-deductible health plan (HDHP).
What makes a health plan a HDHP?
First it must have a minimum
deductible, which for 2017 is $1,300
for a single person or $2,600 for a
family plan and it must have a
maximum out of pocket epense of
$6,500 for a single person and
$13,100 for a family.
Besides having a HDHP, to qualify to
open and contributed to an HAS, you
must also not be claimed as a
dependent on someone elses tax
returns and you must not be enrolled
in medicare.
your lifetime from your Traditional
IRA up to the maximum contribution
limit for that year.
Your returns on your HSA from
stock dividends, interest or
investment profit are all earned tax
free. And distributions taken to pay
qualified medical expenses are not
subject to tax.
One of many advantages of an HSA
is that you don't have to use your
contribution amount in any
particular year. Instead, the funds
continue to accumulate until you
need them. You do not pay taxes on
the earnings, and withdrawals are
tax-free (as long as they are used for
qualified medical expenses).
Another advantage of an HSA is that
you do not lose the funds if you
You can use your HSA funds to cover
hundreds of eligible health care
expenses — for yourself, your spouse,
and your tax dependents. Only eligible
expenses can be reimbursed tax-free
under your HSA. You can use HSA or
funds for most doctor related medical
expenses,nearly any dental, hearing,
and vision expenses, including paying
for the visits to those specialists. ...
You can't, however, use your health
account for cosmetic surgery, diet
foods or gym memberships or for over
the counter medications, unless you
have a prescription.
You can contribute $3,400 as a single
person or $6,750 as a family plus an
extra catch up $1000 if you are over
50. The contributions toward an HSA
are tax deductible or if made through
payroll contributions they are pre-tax..
You can also fund your HSA once in

11. 11RE INVESTMENT NEWS • PAGE
change health plans. Additionally,
once you reach the age of 65 you can
withdraw the funds without penalty
and use your savings however you see
fit.
Perhaps the biggest advantage of the
HSA, is like the IRA or the 401k, it can
also be self directed into items like
real estate and mortgage notes.
So you can make contributions to an
HSA to lower your taxes, invest it in
real etsate and earn profits within the
HSA investment tax free and pull it
out for qualified medical expenses or if
over aget 65 for anything you want
and not pay taxes.
Pretty cool.
Some Tips to get the most out of your
HSA:
Become a Better Healthcare
Consumer
Comparing medical services and their
costs can help you get the biggest
bang for your HSA buck. Be sure to
take advantage of free preventative
care services, review your healthcare
habits, and implement positive
lifestyle changes whenever possible to
minimize the use of your HSA dollars
down the road.
Maximize Contributions
Contributing the maximum amount to
your HSA comes with incredible tax
benefits. Your plan’s earning potential
increases when you give the maximum
dollar amount to your plan. You, then,
have the right to deduct up to the full
contribution amount from your tax
bill, which means that you are not
losing money when paying more into
your HSA.
Understand Qualified Medical
Expenses
HSAs offer the unique opportunity to
make tax-deferred contributions and
tax-free distributions, provided the
withdrawals are applied toward
qualified medical expenses (QMEs) or
reimburse the account holder for
QMEs previously paid for out of
pocket. The list of QMEs is extensive,
but a non-qualified distribution from
an HSA can have tax and penalty
implications. We encourage you to
review IRS Publications 969 and 502
for detailed information about QMEs.
Use distributions wisely
While an HSA potentially covers
every expense related to health and
wellness, you may not want to use
your plan for small costs. Paying for
recurring things such as prescriptions
and annual doctor’s visits out-of-
pocket gives your savings account the
chance to build value, which may be
used for emergencies when large
payouts are necessary. You should
use the distribution incentive
sparingly when it comes to small
expenses that you can technically
afford to pay.
Invest your HSA
Your HSA can invest in anything a
self-directed IRA or 401(k) can, from
publicly-traded securities like stocks
or mutual funds to alternative
investment options like real estate or
precious metals. You may therefore
enjoy the flexibility of self-directed
retirement investing while garnering
the additional tax advantages of an
HSA.
Many banks and other companies
offer the convenience of an HSA
account with a debit card for you to
pay medical bills with. However, if
you are healthy and don’t have a lot
of expenses or you can fund the
expenses out of pocket, you can
make your HSA account grow much
faster with investments other than
mutual funds or savings accounts
which may pay very little.
Common investment choices made
by self-directed HSA participants
include real estate, both domestic
and foreign, options, secured and
unsecured notes, including first and
second liens against real estate, C
corporation stock, limited liability
companies, limited partnerships,
trusts and much more. In my own
HSA.
As a real estate entrepreneur a Self
Directed HSA is just one tool that
can be used to lower taxable income
now through contributions . They
can also lower income by shifting
some of your investing to your HSA
and allow the profits to be earned
there tax free and then accumulate
those funds until you need them for
quaiflied medical expenses or after
you turn 65 to use as you wish.
Several excellent resources to learn
more about Self Directed HSAs
inclue:
- www.TrustEtc.com
- www.QuestIRA.com
And consult with your Health Care
Provider in General in regards to
HSA.

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A lot more than just message taking

13. 10
SUBJECT TO INVESTING
Investing Subject To can mean a lot of
things. When buying a house it
typically means you are purchasing
the property subject to the seller's
existing mortgage. If you are a note
investor, it might mean you are a junior
lien holder and you are foreclosing
subject to a senior lien holder's
position.
As a real estate investor I have
completed a lot of real estate
transactions in the past 20 years. I
have not utilized Subject To a whole
heck of a lot, but it is an excellent tool t
have in your tool box and a strategy
that many investors use to get started.
I know one member at MAREI who
started out with plenty of money and
credit, but made it her goal to build up
her portfolio of about 100 rental
properties by utilizing Subject To so
she could use less of her own money
and less of her own credit. Rather than
30% down and a 70% loan to purchase
a house, where she would run out of
capital and soon have banks turning
her down, this investor focused on
motivated sellers that would let her take
over their payments. And so with little to
no money down, she would buy a house,
get the deed in her name and take over
the sellers exisiting mortage. She would
then go out and rent the home out or
lease option it out at a higher value than
the mortgage, allowing the tenant to pay
the mortgage and her profitl.
This is a very good strategy for the
investor because they don't have a new
loan filling up their credit report and
usually, but not always, the interest rate
on the seller's loan is way less than what
an investor would be able to obtain on a
new loan. It is also an excellent strategy
for the seller, who is probably in a
desparate financial situation with very
poor credit. By my investor friend taking
over their payments, the build up a good
credit history on that one loan and quite
possibly improved their credit.
There is one of there great advantage
and that is that it allows an investor to put
together a deal that would not have
otherwise been possible.
So lets look at the 4 deals I have been
a part of in 20 years that involved
subject to.
Our first deal was a motivated seller
who had been trying to sell a rental
property for several years, gave up on
renting it, let it go vacant and shut off
the gas because it was too expensive,
but neglected to shut off the water
because it was not so expensive.
You can imaging the results in mid
winter when it was 5 degrees, the
pipes burst and everything was frozen
when he called us.
The house needed a lot of repairs for
us to buy it rehab it and retail it. And if
he would have called us before the
frozen pipes, we might have been ale
to buy it. The frozen pipes added
$10,000 to the rehab and if they
thawed out probably another $10,000.
But no matter how we worked the
deal, the numbers for us to borrow the
purcahse and rehab, just did not work.
So he suggested he would just give us
the house, subject to his $55,000
mortgage and $598 a month
mortgage payment. Which, would
have made the deal work because it
eliminated our loan interest, but with
the frozen pipes we were still $15,000
short.
So in the end, he deeded the house
over to u and we took over his
mortgage payments, he paid us
$15,000, and we rehabbed it, sold it
and paid off his mortgage and pocked
about $20,000 in profit. If we would
have had to work with our private
partner to fund this, who at that time
got 50% of the deal, it would not have
worked out, we basically partnered
with the seller.
by Kim Tucker
13RE INVESTMENT NEWS • PAGE

14. My next deal is a mortgage note.
There was a house in Salt Lake City.
The home owners had an FHA 1st
mortgage which they were paying like
clockwork. They had taken out a
home equity line of credit for $20,000
in 2004 to open a restaurant. But I
guess the restaurant was a flop
because they stopped making
payments on the HELOC in 2009.
All during the downturn, the lender on
this HELOC did not try to collect
payments and in 2013, they bundled it
up with a lot of other HELOC
mortgages in 2nd position and sold
them to a hedge fund, and the hedge
fund eventually sold this one with a
few others to me.
We reached out to the borrower who
was making their payments on their
first mortgage, but not on this second
mortgage that we owned. We tried to
rehab them to get them to make the
payments. One strategy in this type of
deal is to threaten to foreclose and if
the numbers work, go ahead and
foreclose.
So we did, we threatened, we
foreclosed, we tried to negotiate to get
them to stay, and they moved out.
So now I had foreclosed on a 2nd
mortgage and owned the house -
subject to the 1st mortgage that the
borrower had been paying all along.
We had to keep paying that 1st
mortgage or get foreclosed on, which
we did. We made payments on that
first mortgage and we owned the
house, subject to this previouse
owners original 1st mortgage.
We then had options, we could sell it
as is, but it was in bad shape and
needed work. Or we could renovated
it and rent it out which would habe
been a good deal really, we had about
$20,000 in the cost of the 2nd
mortgage and legal fees and another
$10,000 in renovations. So all in all
$30,000 invested in a house that was
worth $150,000 at the time and would
rent for $1100 a month. But we didn't
want to be landlords. So we reached out
to a Realtor in the area who worked with
investors, who thought creatively and
had him list it.
Which brings us to our third subject to.
We sold this house in Salt Lake City that
we had acquired by purchasing the
defaulted 2nd mortgage and foreclosing
subject to the 1st mortgage. We kept
paying the 1st mortgage until we sold the
house.
We sold the house to a new investor who
bought the house subject to that same
existing 1st mortgage we had taken over.
So the new investor made the previous
owner's (the guy we foreclosed on for the
defaulted 2nd mortgage) mortgage
which was a little under $900 with
principle, interest, taxes and insurance
and he rented it out for $1200 on a lease
to own.
Our fourth subject to deal was a dead
deal. In the package of detaulted 2nd
mortgages that we purchased in 2013,
the seller threw in one note that was a
mess and had no hope of collecting.
This note was for $10,000 plus unpaid
interest and late fees. This note was in
2nd position behind a $99,000 1st
mortgage. And at the time the note was
aquired the home was worth about
$120,000.
We spent a little over $3,000 getting the
paperwork all set to foreclose, but
because there really was not enough
equity in the house for us to be able to
foreclose on a $10,000 mortgage subject
to the $99,000 1st mortgage and pay off
that 1st mortgage and make any money,
we just let the loan sit.
We wrote the loan off as bad debt on our
taxes in 2016.
The key to this awesome deal was that
besides the $99,000 first mortgage, our
$10,000 second mortgage, there was a
$45,000 third mortgage behind us.
So in about January of 2017 we received
a call from the holder of the third
mortgage. They were planning on
foreclosing their note from the 3rd lien
position subject to not only the 1st
mortgage but also subject to my 2nd
mortgage.
They took the 3rd mortgage to
foreclosure, which in New Mexico
where this house was, took almost 9
months. They called in October and
wanted a payoff. They had
foreclosed, taken posession and were
selling it as an REO. To sell it they had
to pay off the 1st and 2nd mortgages,
plus any of the unpaid interest on
these mortgages, plus any late fees,
plus any legal fees incurred by them.
When I figured this all up, on a note
that I had gotten basically for free, I
was owed about $14,000.
And because the third mortgage
holder had acquired the house
thorugh foreclosure subject to my
2nd mortgage, they had to pay me.
Not a bad deal.
So as you go out there and negotiate
with desparate motivated sellers,
keep this subject to thing in the back
of your head. You might find the
perfect deal to salvage by utilizing the
strategy.
We will be talking about subject to at
the November 14th MAREI Meeting.
Our special guest is a Real Estate
Invstor and Fortune Builder's Mastery
Coach, Edward O'Daniel from St
Louis. He is going to be giving us a
broad level overview of subject to, so
you can understand the basics and
formulate a deal.
14 RE INVESTMENT NEWS WWW.MAREI.ORG

15. ACITVE VS PASSIVE REAL ESTATE INVESTMENT STRATEGIES
by Robyn Thompson
Are you an active or passive real
estate investor? This is the MAGIC
question that all real estate investors
should ask themselves on a regular
basis, wether they know it or not. Let
me explain.
Many beginning investors want to
focus 100 % on wholesaling and
rehabbing so they can make the fast
cash and big checks. They don’t want
the headaches of toilets, trash and
tenants. After all it feels good to take
a rundown house and flip it to a
rehabber and make a quick $5000 or
$10,000 in a few hours or better yet
tear it apart, fix it up and sell it to a
first time buyer who will call it home
for many years to come and you can
make $25,000or $30,000 plus in just
a few short months.
Active investing can be addicting and
multiple offers to the seller not just
low cash offers at MAO (Maximum
Allowable Offer : After Repaired
Value x70% - Repairs). A
transaction engineer can make
offers at market value and still make
huge profits. The transaction
engineer understand the power of
getting terms, amortization
schedules, discounts for early pay
off and maximizing appreciation.
A transaction engineer will focus on
creating a wealth plan that will
incorporate both active and passive
investing because the older you get
the more passive you want to
become. Let me give you a real life
example. We will use me as the
example.
At the beginning of 2013 I noticed
the US economy starting to improve.
Real estate prices were at the
absolute bottom in many parts of
a real adrenal rush. Ask me how I
know that. My nickname is the Rehab
Queen and I have been rehabbing and
flipping as an active income producing
investor for over 17 years. I have
done over 350 properties and those
quick one time paydays have been
great. But…..
This one sided thinking is FLAWED. I
missed the boat for the first decade
and a half of my career. What you
really want to be is not a wholesaler,
rehabber or a landlord. The best
choice is to become a transaction
engineer.
A transaction engineer is a savvy
investor who can create deals that no
other real estate investor can do. A
transaction engineer knows that some
properties are more profitable to keep
than to flip.
A transaction engineer can make
15RE INVESTMENT NEWS • PAGE

16. 08
the US. I had been watching prices tank
for nearly 7 years and as Warren
Buffets says “Buy Low and Sell Higher.”
I was bound and determine to not miss
the next appreciation run up. After all I
had moved to Florida in 2007 at the
height of the market. Prices were
climbing as much as $1000 per week in
some neighborhoods and I wanted to
ride the wave upwards. I no sooner got
settled in Orlando Fl and was ready to
jump in to the hottest market in the US
went it sank like the Titanic.
As prices hit rock bottom in 2013 and
then stabilized as low as $27 per ft , I
was ready to jump in and create some
massive passive wealth. I was
approaching my 50th birthday and
realized that retirement was
approaching quicker and quicker.
I wanted to make money even if I
couldn’t get out of bed. I wanted to
buy and hold some really nice homes in
golf course gated communities, in great
school districts where tenants could
afford to pay premium rents. I wanted
the type of properties that would
appreciate the fastest.
I had enough of the low end section 8
night mares in my younger years. I had
my share of bad tenants wrecking my
houses, not paying rent, having to hire
attorneys and evicting tenants, being at
the mercy of the courts to get the dead
beats out. I promised myself never
again.
So I jumped in full force and started
marketing for desperate sellers with
beautiful homes in beautiful
neighborhoods so I could purchase
enough real estate for the rents to take
care of me, my farm and my horses for
the rest of my days.
before your golden years would truly
be golden? Is it 5, 10 or 15?
My plan is $25,000 per month after
property taxes, insurance and
maintenance. The $25,000 will cover
me, my ranch and all 30 horses in a
life style that is more than
comfortable. All my properties will
be free and clear within the next 5
years by the time I am 55. The best
news is this income is all passive.
So the moral of the story is you
wholesale/rehab to keep. You flip to
keep. You flip to keep and you flip a
few more to keep.
You are both an active investor and a
passive investor. This process will
make your golden years truly golden.
I look forward to coming to MAREI in
January and teaching you how to
evaluate deals so you will know with
absolute certainty which properties
are the best to rehab to flip and
which properties are the best
properties to keep and build massive
passive wealth so you and your
family will have golden years.
I bought over $3 million in properties
during 2013. All of the properties were
purchased with seller financing as low
0% to as high of 3% interest. Yes that
is right many were at ZERO PERCENT
INTEREST! The entire payment all
goes to principal.
Here is an example of one property: I
bought an estate sale on Hugh St in
Port Orange that was listed for 4
months in the MLS at $139,900. No
other real estate investor saw the deal.
They are not transaction engineers.
The house needed paint and carpet
which was $5,000 in repairs. I gave the
seller three offers. She picked the third
offer which was $130,000 purchase
price with $30,000 down (this came
from an flip) and I would pay the
remaining $100,000 at $1000 per
month for 100 months.
I rented the house out for $1250 per
month which covers the taxes,
insurance and the $1000 per month I
owe the seller. Every month I make her
a payment, the loan reduces by $1000.
It all goes to my net worth and none to
a bank. You do realize that the house
will be paid for in just 8 1/3 years, not
30 years!
I have owned this house now for just
34 months and my loan is down to
$66,000. The house has appreciated
and the current value is $155,000. I
have made $59,000 in principal
reduction and appreciation in just 34
months. The great news is the
numbers get better every month! This
house will continue to pay me for the
rest of my life rather I get up and go to
work or not.
So let me ask you a serious question.
How many of these do you need
16 RE INVESTMENT NEWS WWW.MAREI.ORG

17. 17RE INVESTMENT NEWS • PAGE
Y O U R N E T W O R KIS YOUR NETWORTH
by Vena Jones Cox
Ask any really successful real estate
entrepreneur what resource has
made them the most money, and if
they’re answering truthfully, they’re
going to say, “The people I’ve met.”
In fact, if you’re not making it a
priority to spend time creating,
growing, and nurturing your network
of colleagues and financial friends,
you’re making a big mistake.
I’m not a natural networker—I would,
on any given evening, rather be
curled up in front of a fire with a
good book than at the hottest party
in town.
In fact, if you’re ever AT a party with
me, and you’re looking for me, I’m
probably the one behind the potted
plant playing with the host’s cat.
BECAUSE I NETWORKED WITH
THEM AND KNOW WHAT
THEY’RE LOOKING FOR. I can send
out emails about great deals all day
long, but the person I sell it to will be
the one that I call personally and say,
“You know how you were telling me
that you were looking for a small
multi-family, but that you wanted at
least 4 units and wanted one with
some upside potential? Well, guess
what, I have the perfect deal for
you”.
Here’s more: most of the money I’ve
raised to buy houses in the past 5
years has NOT been by standing in
the front of the room and telling
people I need money; it’s been by
networking, and finding out from
people that they have money that’s
not performing the way they want it
to, and finding out what they’re
comfortable with in the way of
But, at the same time, I am very aware
of how many millions of dollars my
network has earned me in the past 2+
decades, and I’ve seen the nearly
tragic consequences that NOT having
a network when you need one can
have.
Early on in my career, it was more
experienced real estate association
members who served as my backstop,
confirming (or, in some cases, totally
trashing) my evaluation of deals I was
considering buying . Without them, I’d
have made a lot of mistakes that I
didn’t make and passed up a lot of
opportunities I didn’t pass up.
Later in my business, when I started
wholesaling, I rarely had to advertise
my deals at all. And I don’t just sell
90% of the deals I wholesale to
members of my local REIA; I sell them
to members of my local REIA

18. investment amount and terms, and
then connecting with them later and
arranging a deal for them to be in.
And I’m not the only one: I was
approached by a young man a couple
of weeks ago in Indianapolis who told
me that at last year’s OREIA National
Summit, he randomly met another
attendee from Indy who happened to
have a property he wanted to get rid
of, and he made a deal in the bar, and
made $27,000 on the house.
So what am I telling you? Make it a
priority to put yourself in the way of
networking opportunities at your
local association, conferences and
summits, and wherever else real
estate investors hang out.
18 RE INVESTMENT NEWS WWW.MAREI.ORG
Join your local real estate
association and get to the meetings
regularly. Spend time at events like
the OREIA National Real Estate
Strategies Summit (one of the best
networking opportunities in the US,
in my opinion) and expand your
network across the country.
Talk to people. Ask questions. Be
curious. Yes, even if you’re an
introvert like me. Even though you’re
not sure they want to talk to you. I’m
telling you, you’ll do more real estate,
and better real estate, when you do.
By the way, be sure to come out and
network with me at MAREI in March
2018.
Grab more of Vena's wisdom on her
website www.REGoddess.com and
be sure to look for her blog post
"How to Prosper in the 2018 Real
Estate Market" and be sure to come
see her in KC in March.

19. Build Your Team
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