The Investment News: May 2011


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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

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The Investment News: May 2011

  1. 1. MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORSInvestment NewsNETWORKING : EDUCATION : COMMUNITY May 5, 2011 PUT IT ALL TOGETHER  Join marei today  Utilize all the benefits  Attend the May meeting
  2. 2. m ar ei BUSINESS MEMBERS ADDRESSING THE NEEDS OF THE REAL ESTATE INVESTORType Company Web Phone ContactAttorney Wise / Anderson 816-942-5925 Bob WiseContractor Te-Tee Light MAREI Vendor 816-356-1870 George BaiLender Argentine Federal Savings 913-402-1500 Ann WilkinsonRealtor Realty Resource 816-523-4400 Kim TuckerSupplier Home Depot Home Depot 816-510-9199 Roger HolyfieldSupplier Canyon Stone 913-254-9301 Matt PuckettTitle Accurate Title Company 913-338-0100 Jackie WhiteWholesale kcmoHomeBuyer 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, Look in under the Toolbox tab under “Service Directory”. 2
  3. 3. Contents MAREI News In This Issue MAREI Business Members 2 MAREI Staff 5 Notes from Director 6 Purchase and Hold Real Estate 8 Get More Offers Accepted 12 Five Excuses 14 Boom or Bust 16 Realtor Nationwide Open House 18 Training Events 20 Government Affairs 22 Calendar 23 Market Trends 24 Repositioning for Big Profits 26 Squeeze Your Membership 28 Features ‫ ׀‬May 2011 There are 15 good reasons The key to making money to buy and hold investment is making offers, right. property according JJ Paw- While that’s certainly part of it, getting offers ac- lowski, Investor, Broker, 8 Lender and our guest 12 cepted is what causes the cash to flow. Transaction speaker in May. engineer Auggie Byllott shares some secrets.Investment News Page 3
  4. 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- sarily reflect those of the association, the board of directors or the staff. 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 Call 913-815-0111 for more information. Email ad copy to Mail payment to MAREI, PO Box 8685, Prairie Vil- lage, KS 66208 or request an online payment for to use credit or debit card.Page 4
  5. 5. MAREI StaffKim Tucker 816-523-4400 Don Tucker 816-523-4400 Steve BurnsDirector President Audio 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 GoodwinMeeting Ambassador Meeting Investment News Page 5
  6. 6. Director’s NotesAs we look forward to the rest of 2011 and starting 2012 But what does that do for you as an Investor and our we keep referring back to the brochure on the Profes- Industry as a whole? It brings you and your business sional Housing Provider Program. This is program we into a professional light with the general public. We have started as a part of our membership with National will be though of as people who improve the commu- REIA. We are working to put together meetings and nity, help people obtain the dream of home owner- training events designed to help our Members who par- ship , or provide quality rental housing for those whoticipate in this program complete the 60 hours of training cannot own. In many cases we find that we are still including 42 hours of core courses. thought of as grimy, miserly, money grubbing land- lords who kick granny out in the cold after we steal her As this is a fairly new program at MAREI and as we house away from her with lies and trickery. have had so many brand new members come on board in the past few months, I think it is important to review This industry designation will give you the ability to what the Professional Housing Provider Program or show the general public otherwise. You can say, see I PHP Program is and how it can benefit our Industry. am a PHP which means I have a code of ethics that I follow and have taken extensive hours to training to As professionals who take the time to obtain my designation and I continually study to im- adhere to a code of ethics, to learn prove myself with continuing education. best practices, and be better at pro- viding housing for sale or rent or even So remember when you attend an event and see that storage units, mobile homes, or office we are handing out certificates of attendance at the space for lease, we have never really back of the room, that they are for the PHP program. had a way to show the general public To participate in the program and obtain credit, you that we have take the time and made must be a member of MAREI, you must preregister the effort to be better professionals. and attend the live class in it’s entirety. And then at the end of the event, collect your certificate, and re- Now, with the Professional Housing cord the class in your program folder. Once you ob- Provider program, member profes- tain your 60 hours of training including the 42 hours of sionals across the country have been key core courses, then you will receive special recog- completing the training and adding these three little let- nition at the MAREI meeting as well as at the Nationalters after their name . . . . PHP . . . Or adding that I am a REIA Mid-Year Event. Professional Housing Provider. To find out more about the program, pick up a bro- In the not to recent past, real estate agents banded to- chure at the meeting or see the Education Tab on our gether to do the same thing. They started a National website. Association of Realtors, handed down specific code of ethics you needed to follow to be able to call yourself a Kim Tucker Realtor and had further training so you earn specific Director of MAREI designations such as ABR, ABRM, or CCIM for exam-ple. The PHP program is the same for real estate inves- For more info, go online to: tors and maybe one day we will have the Investor name with a capital “I” trademarked and only special real es- tate investors will be able to call them selves Investors.
  7. 7. Photos from the Lead Safe Work PracticesWorkshop on April 9th. Students pose in thelatest look: White Jump Suits and Blue La-tex Gloves.
  8. 8. Purchase and HOLD Real Estate Through personal real estate investing experience for cure job was actually a myth. A myth you may ask? the past 8 years, as well as professional experience as Absolutely in my opinion! I believe it is a myth to an investors agent representing real estate investors, think your job, or the jobs of your loved ones, are Ive discovered at least 15 good reasons to buy and ever 100% secure and safe from the realisms of the hold an investment property. corporate, credit, financial, professional, and busi- ness worlds. Life often proves it is rare to find any- Reason #1 - Necessity thing guaranteed, besides taxes and death. Rental property is a necessity in every community, So how does the average American ever really get every city, and every state, everyplace. There will al- ahead of the game of life? Are you ever able to say ways be people who, for one reason or another, won’t to yourself, ―My financial future really is safe and se- purchase a home and will rent instead. From poor cure!‖ Yes, you can. I believe based upon my experi- credit, to affordability, to simplicity, to income limita- ence, real estate investing can afford you the oppor- tions, to not wanting to own anything, the reasons peo- tunity to move beyond the rut of the 40 hour work ple have for wanting to rent go on and on. week. Maybe not tomorrow, or next month, or next Reason #2 - Security year, but in the future, when it really matters, should The importance of providing for yourself and your fam- you chose this path, allow yourself the time to pursue ily by having a safe and secure job was demonstrated it, and then work for it. Do something today and to me from a very young age. This safe and secure job make it happen! provides a steady income with benefits, a retirement Reason #3 – Passive Income plan, and so forth. Watching as my parents worked, You have a safe and secure job where you work 5 and my own experience from my work history, I also days, 40 hours a week. This is called active income. realized the idea of having this so called safe and se- Monthly Meeting 1 PHP CREDITS Don’t miss this event! Attend the May MAREI Monthly Meeting and join JJ Pawlowski local Real Estate Investor and Broker as he shares solutions to some of the more common prob- lems facing real estate investors today. Location: Sylvester Powell Jr Community Center: 6200 Mart- way in Mission Kansas JJ Pawlowski Date: Tuesday April 9th: Doors open at 6:00 Broker / Agent Cost: Members FREE, Guests $25 at the Door or Pre-Register Chartwell Realty for $15. See more & Register online.Equity Development PHP: 1 Credit Management PHP, members only, must be pre 816-916-4593 -registered through the website to receive credit.Page 8
  9. 9. You must show up and work if you involved but the way the planningwant to get paid. system is taught and just accepted speaker by most.Passive income is money thatcomes to you time and time again Reason #5 - Cash flow agendawithout you showing up for it. Yes, If you think back to the passive in- The May 10th Monthly MAREIyou will have had to do something at come example I talked about, you’ll meeting will host JJ Pawlowski,some point to create passive in- remember the example of owning a local Kansas City area real es-come. Maybe you had to take 20 rental property for the monthly pas- tate Broker and Investor withhours to learn about real estate in- sive cash flow. Would you be able years of professional experi-vesting. Perhaps you had to put in to use this monthly passive cashanother couple hours to paint the ence. He is join us to solve a flow when you are retired and sup-house. All in all you might have more posed to be enjoying your life? few problems facing local inves-than 50 hours in this home during tors today:your ownership years. Who cares? Reason #6 - TimeThe bottom line is you are not going  Tenants Trashing Rentals Why does it matter you take the timeto work at it every day for 10, 20, 30,  Negative Cash Flow now and plan for your future finan-or even more years! This is the dif- cial security and success? Because  Listing on MLSference between active income and of continuous improvements in  Determining Scope of Workpassive income. Passive income health care and quality of life, the  Dealing with Contractorsshows up for you without you show- average life span for a normal adult  Notice of Intent to Selling up for it! continues to increase. If the life span  Lack of LendersReason #4 - Retirement in 2006 is expected to be in the 70s  Lack of 10% Down PaymentRetirement, in my opinion, is not and 80s for males and for females,  Investing with Emotion what will it increase to in 20, 30, 40,  What is Exit Strategyabout depending on Social Security or even 50 years from now?  Where Do I Startor your family for your financial sur-vival. Did you know as of 2006, ap- Reason #7 - Leverage  Too Much Informationproximately 90-95% of people at re- What is leverage? Leverage is the  Where’s the Magic Beantirement age were still dependent! ability to do more with less. Real es-This is an easy statistic you can find If you have had questions on tate is one of the best forms of lever- any of these items join us as JJin about 1 minute of searching the age an average person can utilize tointernet. Most retirees are depend- provides the answers. If you get off the sidelines as a spectatorent on family members, children, and start playing in the game of life. have other questions, bringtheir job, or the government for their How does this work? those along too!.financial support and survival. This isa very unfortunate fact. Work all your Take for example someone walkinglife only to be dependent in the end? into a bank and asking for a loan.Retirement should not be about wor- Let’s say the person wants to buy All attendees will find $100,000 worth of stamps. Howrying every day about your 401k or much money will the bank tell the out how to get a FREEother savings running out andthereby being forced to penny pinch person they will need in order to do ebook: “The 10 Real Es- this? The answer is probablyevery day. Take a look at how the $100,000! Now, using the same ex- tate Investing Hard Les-financial advisors will tell you to plan. ample let’s say the same personThey want you to budget, save, plan, wants to buy a house for $100,000. sons Gurus and Agentsand not overspend so you haveenough money to outlast your life. How much money will the person Will Never Tell You Up- need to do this? The answer de-Die before you run out of money? Is pends on the credit situation of the front and How You Canthis serious? You bet it is. Don’t getme wrong, I have nothing against individual, but most of the time the Save Time, Headaches money down will be between 3.5% -financial advisors, and great ones 20%, or $3,500 - $20,000. This is a and Money and Avoidare worth their weight in gold be-cause their guidance and knowledge lot less than the $100,000 the house Making the Very Same is worth and the person owns thecan truly make you a lot of money house! How is this so? This is so Mistakes.over time. My point is not the people (Continued on page 10) Page 9 Investment News
  10. 10. because this is leverage. side with someone who has done Are you one of the many people exactly what you desire to accom- (parents) who look at the averageReason #8 – Helping Other People plish. cost of a four year college and itYou can help other people by invest- makes you cringe and tremble? I just Reason #11 - Equitying in real estate? Yes, you can. looked today online and found sev-There are several ways this works. What is equity? In the case of real eral sites reporting the average costOne, you are providing safe and se- estate, equity is the difference in the of a private college around $30,000cure housing to someone who needs value of the home and the amount per year. The average cost of a pub-safe and secure housing. Secondly, owed against the house. lic college seems to be aboutby helping yourself become finan- $12,000 per year. I believe these Equity grows and grows when it iscially free, you will in turn be able to numbers include tuition, room, and untouched over long periods of time.donate money on a regular basis to board. How can the average person Someone else, your tenant, is help-all the wonderful and worthwhile save enough money to pay for this? ing you pay down your mortgagecharities in the world. Third, you are and this is how you become wealthy So, as an example, look at buying ahelping your community when you by investing long term in real estate. $100,000 piece of real estate whenpurchase or help others purchase Don’t forget the fact that when you your child is 5 years old. How muchinvestment property. Finally, be- bought the house, you probably only is this real estate worth when he orcause you will be successful and put down 10 or 20%, so for the she is 18 years old? Taking into ac-financially free, you will be a health- $25,000 or $50,000 you would have count a measly appreciation of onlyier, wealthier, and a wiser person spend when looking at the example 2% per year, the value of the housewho will be able to better provide above, you would now have 7-14X in 13 years is $129,360.66. A bettermentally, physically, financially, and or more this amount in equity! How 4% appreciation would yield a valueemotionally to your family, friends, about that for a great return on in- of $166,507.35! Bingo!co-workers, and everyone you come vestment?across in your life! At this time, you can either sell the Reason #12 – Permanence house (a taxable event) or refinanceReason #9 – Tax Advantages Life is hectic. Luckily, real estate the house (a non-taxable event) andI am not an accountant and I cer- take out some equity to pay for stays put in one place. With few ex-tainly recommend you check with school. By renting the house for 13 ceptions and Mother Nature, realyour own tax preparer on the various years, you have probably been able estate doesn’t go anywhere. Yourtax advantages you might see from to pay the initial $100,000 mortgage property will be there tomorrow, nextyour own real estate investing. down by tens of thousands of dol- week, and next year, 10 years fromSome of the benefits Ive been able lars, therefore even increasing the now and so forth. I once experi-to utilize are appreciation, deprecia- amount of money you have at your enced the power of Mother Naturetion, legally deductible expenses, disposal. when she took one of my housesand carry forward losses. Do I un- completely away in a tornado. Don’t Reason #15 - Fix whats brokenderstand what all of these are? No mess with mother!way! I appreciate my accountant. I just saw headlines that indicated Reason #13 – Business Owner- about 13% of homes in the US areReason #10 - Education ship vacant. Many of these are foreclo-You don’t have to have a formal sures just sitting there for years. Be- It is said by many one of the easiesteducation to become a real estate coming a real estate investor or ways to become financially free ininvestor. You don’t need a college helping real estate investors buy va- this wonderful country is to own yourdegree, you don’t need hours and cant homes will help fix our current own business. Real estate investinghours of studying and taking tests, real estate situation. is a business and you should treat itand you don’t need to be an ac- as such. Real estate gives the prop- I admit many of the above reasonscountant, Realtor, or any other type erty owner many great tax advan- and benefits of owning investmentof trained or licensed professional. tages. Real estate investing gives property Ive discussed could eachYou don’t need to do any of the the property owner the same tax ad- be a blog post in and of themselves.above in order to become a suc- vantages plus the tax advantages of Some might be too simplistic in mycessful real estate investor. I know business ownership. You get to de- examples and explanations. Hope-this to be fact based upon my real duct all your expenses associated fully though youve gotten some newpersonal experience. Although I am with your business. ideas you can pass along to youra licensee now, I personally did real Reason #14 – Pay for Your Child’s clients or use in your own real estateestate investing for years before get- investing models.ting a real estate license. One of the Educationbest ways to learn is to work side byPage 10
  11. 11. More Information . . . More Confidence On Demand Training 30 Minute Segments Top Investor Trainers From the Comfort of Your own Internet Connection More Profits Tenant Screening Get Started Today Pre Employment Screening Contractor Screening Collection Services Take a FREE Trial Discounts for MAREI Members With Andy Heller REO’s & Lease Options 816-436-0085 Do the math.“Presentation is Everything!” Your vacancy is costing you every day. Fill your vacancy faster and save money with! Discounts for MAREI Members: Receive 20% off all Regular Priced Advertising. Log into 550 E. 56 Highway, Suite B Member’s Area, click on Member Olathe, KS, 66061 Discounts and look for MAREI’s Phone: (913) 254-9300 Discount code! Fax: (913) 254-9301 info@canyon-stone.comInvestment News Page 23
  12. 12. Get More Offers Accepted The key to making money is making offers, 5. Make multiple offers, one all cash, one right? While that’s certainly part of it, getting some cash now and some cash later, and no offers accepted is what causes the cash to cash now and more later. Give your seller a flow! And flow it will if you follow a few simple choice and let them know you want them to steps. accept the offer that best meets their needs. 1. Whenever possible deal directly with a 6. Be prepared to help the seller understand property owner. Dealing with principals will your offers. You can remind them that you are make for better and more effective negotia- running a business and that if you cannot tions and provide a basis for creating a syn- make a profit you cannot stay n business ergistic solution. This will result in the other (though that’s not their problem). party having greater buy-in and increasing 7. Let them know that you can close quickly the probability they will see the transaction (or on a schedule that meets their needs) and through to the end. you are willing to buy their house ―as-is‖ and 2. Be sure to learn their motivation…‖Why they won’t have to do any repairs. are they selling?‖ your offer(s) must solve 8. Your lowest offer will be your all cash offer this issue. To often investors fail to under- because with banks not lending, cash is ex- stand what the other party’s problem is and pensive to come by and therefore a greater attempt to solve something the other party discount is required. may not even consider an issue. People like to do business with someone they trust. In 9. Upon presenting your offer(s) sit quietly for order to do this you need to build rapport and a moment or two and allow them to process focus on their problem. the information. If they ask questions, provide answers. If they don’t ask questions, you can 3. Whether you’re working with a real estate ask them which offer do they find most ap- agent or direct with a home seller you need pealing? It will give you an insight into which to be the one making the offer(s) and be pre- type of offer might work. sent. This provides you an opportunity to ex- plain, clarify or modify your offer 10. Ask them what they plan to do if you don’t buy their house? If you don’t close on the 4. Never present a single offer. If you’re a spot, you can always remind them that they one-trick pony; you know what I mean 70% might want to consider you Plan B because minus repairs (the MAO formula) or 65% mi- everyone’s situation will change with time and nus repairs (the wholesale MAO formula) circumstance. you’ll have a tough time closing deals where the debt on the property exceeds your offer. Now you have bought the property, let’s Get This is not a one-size fits all business. Learn more Cash Flow . . . .NOW! how to become a transaction engineer. (Continued on page 13)Page 12
  13. 13. One of the greatest opportuni- ing cash with your equity part- without much experience, Ities we may ever see is staring ner based on whatever percent- might be willing to give 80% ofus in the face. Mortgage rates ages you agreed to (in writing). the deal the equity partner be-have now been at historic lows cause I’m trying to get started You and your equity partner willfor a while, the stock market and don’t have cash of my own. divide the benefits from thehas proven an unreliable wealth Even if you give up 80% of your property on whatever basis youbuilding vehicle for the average first five deals you’d effectively establish. 50/50, 60/40, 70/30.person. This has set the stage own the equivalent of one com- You’ll split the cash flow, thefor building private lending rela- plete free and clear house! appreciation, the depreciationtionships that can finance your That’s powerful. As you develop and the tax benefits. It’s all upreal estate deals. But wait…this your skills you’ll be able to com- to you and whatever you nego-is an article about cash flow. mand higher percentages be- tiate. If you get really good at cause you’ll be a credible part-Fortunately I don’t have to start this you can even give up your ner!over because many of these 10% management fee and out-private lending candidates are source property management ________________also candidates for equity par- and focus your time on findingticipation deals. Imagine, if you more deals and more equity Do you want to learn how to dowill, you find a great deal you partners. The beauty of this a deal like this? If you’re likecan purchase for cash at a 50% strategy is that when you have most investors today, you’re– 60% loan to value. You give a vacancy you don’t have an facing no money, no credit, andyour investor/equity partner outgoing mortgage payment. no idea where to start. That’s60% of the deal in exchange for where the right instruction can This is just one of the manythem coming up with the cash come in. Take the time to visit strategies I like to use to lowerto buy the property. the link below to join in my 7 risk and increase returns. WhileThey come into the deal with I realize I’m giving up some of module course from Nationalimmediate equity and you have the upside, I’m trading it for a REIA’s Online University. Thisno debt! If there is no debt there perfect risk reduction strategy. course offers 3 Financing Cred-are no mortgage payments. Besides, using this strategy I its for the Professional HousingYou simply collect rent and pay effectively own half a house Provider Program.the taxes, insurance and main- free and clear because the eq- August Byllotttenance (unless you have your uity partner and I might be www.PACTProsperity.comtenant take care of it). The re- 50/50 in the deal. Let’s mareiU.maining cash flow is split be- say I was a newbie comtween you and the equity part-ner. Since you have used yourskills and secured the dealyou’ve already made a valuable Auggiecontribution to the deal so you Byllott, Transaction Engineermight also be able to get com-pensated for managing the Featured national trainer on the newproperty. You might take 8-10% online training university from Nationaloff the top for management and REIA. Visit to preview his coursethen after paying the remaining Creative Financing, made up of 7expenses you split the remain- thirty minute modules. Total cost is $39.00. Investment News Page 11
  14. 14. Five Excuses Real Estate Investors Make I Don’t Know What to Do! This is the I Can’t Find any Deals! Not sitting 1 first excuse holding new investors back 4 here wining you can’t. No matter what from taking action. It is a valid excuse type of deal is your focus, you can look in that is easily remedied. There is a wealth the local papers, online classifieds, for sale of information out there for FREE or almost by owner sites. Have a particular niche? free. Start with online articles and webinars Create a list of potential motivated sellers then move up to REIA training. This is a and market to them through direct mail, great way to introduce yourself to all the online classifieds, and social media. The ways you can participate in real estate more people you call or network with, the investing. Once you find your more postcards you send out, the niche, buy the course and fol- more deals you will have to evalu- low the step by step instruc- ate. The more you evaluate, tions. the sooner you find a deal. I Need _______ (Insert I Don’t Have Time! 2 Item Here) First! This 5 Time is very valuable, one is just a way of put- but remember Rome ting off taking action. New was not built in a day or by Investors spend hours, days, one person, and your Real Es- weeks finding a phone num- tate Empire will not be either. ber, designing logos, creating You can choose to make time and websites, and buying business hire assistance or technology to take cards. Yes, all items that you really need, some of the time consuming tasks from but you can get everything you need for un- your shoulders. der $100. So what if it isn’t perfect, you can Sometimes we say ―I Don’t Have Time?‖ always change it next month as you refine but what we really mean is ―There is too your investing business. much to do and I Don’t know where to start.‖ I Don’t Have any Funding! Yes this is 3 an excuse. Go out there and become This is where having training and support from the local REIA group can assist you. involved in your local real estate investor From the training you can outline all the association or join one online if there is not steps and start tackling them one at a time one in your area. Then go call on signs, and where ever possible put technology in send out marketing for deals, go look at place to do the task for you. You will find properties. When you find a deal that is resources for technology and key team play- truly a deal, partner with someone at the ers to help you with the tasks at the local group. Honestly, the money will come REIA groups. when you find a true deal.Page 14
  15. 15. Advanced Investors Focus Group Happy Hour in Waldo Wednesday March 20th 5:00 to 6:30 Topic Monetizing Dead Leads 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. Be sure to register for our Resources Tab newsletter for important Heartland MLS Statistics updates& calls to action.Be sure to use your discountcard for savings of up to 40% 2% Rebate, Get regular pricing in all stores Instructions in the membernationwide. This is all part of area of Loga NATIONAL Contractor Ac- in, click on Member Librarycount for awesome price sav- and look for Home Depot inings! Card is in your mem- the Benefits Section.bership package! Investment News Page 13
  16. 16. or Bust Is the Sky Falling or is Kansas City Real Estate about to Boom? Local Realtor Eric Deeter shares in his blog . . “If you live in the Kansas City metro you still . At have a good opportunity to get a bargain on a good home. However, getting a home you “The Kansas City Business Journal reports that love at a good price is not as easy as the me- Kansas City metro real estate sales are down dia will lead you to believe. Houses in good 13% compared to this time last year. And repair and well-staged are selling well.” prices of existing homes declined an average of 5%. And there is no shortage of pundits on Take a look at the average suburban, owner TV telling how we’re still going to see a mass of occupied neighborhood and you will find in- foreclosures. vestors competing with home buyers to get a good deal on the bank owned homes, the av- But when you look back at last year you have erage homes that could use a bit of spruce up to keep in mind that we had an artificial stimu- sitting on the market for days on end, and the lus to the market: the “first time buyer tax all updated houses if about the same if not a credit”. This was the government’s attempt to bit higher than the average houses are moving goose the market. It worked, & most of the in 30 to 60 days. sales for the year happened in the first quar- ter.” So if you are buying homes to resell be sure to do your homework. Know what the other We have to keep in mind when we are looking houses in the area look like the ones that have at comparable sales for the past year that we been on the market for ever and the ones sell- had an artificially high volume of sales through ing in a month. Renovate accordingly. Also April 30th, 2010. Sales that seem to virtually be sure you know the ins and outs of FHA fi- stop on April 30th, picked up slightly as we nancing and the special buyer incentive pro- went into October and then dropped off during grams that are currently available. Do you the cold of the holidays and winter. homework, know the numbers, and don’t get Eric goes on to point out that . . . greedy and you will be on your way to Rehab ―This year may play out to be slower than last Profits. year, but there are a lot of reasons to be opti- mistic about the future. Fortune magazine has Eric Deeter an article this month featuring data from a com- Realtor / Investor pany named Metrostudy. They conduct real Realty Resource estate research in 19 states, covering about 115 E Gregory Blvd 65% of the US market. Metrostudy is forecast- Kansas City, MO 64114 ing a housing shortage looming in the near fu- 816-523-4400 office ture. In a recent blog post they predict that the 913-579-3354 direct market is at the bottom and will begin working its way back up from here on out.” www.EricDeeter.comPage 16
  17. 17. MORTGAGE MINUTE accuratePower Saver Program: HUD se-lects lenders to participate in new Accurate Closings:pilot program to help homeowners Smooth, Timely, for energy improvements totheir homes. FHA PowerSaver Title Services Provided for:program to offer low-cost financing  FSBO, Wholesale, & REO Transactionsto credit-worthy borrowers.  New Construction ClosingsExpiring Commercial Loans:  Commercial Purchases and RefinanceThe US SBA is offering their  All Types of Loan ClosingsCDC/504 Program to help refi-  1031 Exchangesnance Commercial Loans thatneed to be refinanced in the next 2 MAREI  FHA, VA, USDA, Conventional Loans,years and have been unable to Internships and Hard Money Loan Closings  Refinance & Reverse Mortgagesfind a refinancing sources. Managing  Doc Prep, Prelim HUDS, Curing IssuesPrivate Debt Market for Multi-  Short Sale Closing & Assistancefamily: Depending on how the Websites  100 Years of Combined Service!reform of Government SponsoredEnterprise like Fannie & Freddie Booking www.AccurateTitleCo.complays out, we could see a return to Events 913-338-0100 phoneprivate sector loans of the past. SellingFHA Premiums Increasing:Mortgage insurance premiums for Advertising PRIVATE LENDERFHA loans have increased by 25 Graphicbasis points for loans that were Locally Owned & Operatedstarted or assigned on or after the Design Private Money Lender18th of April. This is the third in-crease in premiums in the last 12 We are a Direct Lender,months. These increases are be- Email not a Brokering put into place to restore theagency’s funds, which remain un-  Rehab Loans up to 100% of Costsder a 2% reserve that is required.  Up to 65% of the ARV Read more about all of  Terms from 30 Days to 1 Year these topics on the  Rates from 12 to 16% Interest MAREI Blog for 05/03.  Points from 6 to 10  Appraisals Required  Draw Requests on Wed. Jeff Basler 913-221-9080 Investment News Page 15
  18. 18. During the weekend of June 4-5, 2011 REALTOR Associations from across the country will be promoting a Nationwide Open House Weekend. REALTORS will be out in force holding open homes and talking about the benefits of homeownership. Here are 4 tips to make sure you open house is effective. Prepare your Property: There are 1000’s of  Coordinate with your Neighbors: Coordi- articles for tips on how to have your home all nate all the other homes for sale in the area so renovated, yard all spruced up, home cleaned that you are all open at the same time and you professionally, and staged as your budget will al- are all coordinating the advertising. Have maps low. So start preparing your property now, so you of every open home available to direct traffic. The will be ready the first week end in June. more houses open, the more traffic you are going to generate. Prepare your Marketing Pieces: Review  Get Creative: Create a theme to generate your marketing pieces to see where you need to traffic from one house to another. Example pick order new: yard signs, directional pointers to di- up a playing card at each house for a winning rect traffic, flyers for the flyer box, flyers for the poker hand and at the end of the day, the best house, banners. It may take a few weeks for hand wins a gas card. newly ordered items to arrive, so order now. Prepare your Takeaway Items: Ideally, you  Schedule Your Marketing: You can create a want to sell your property with the open house. lot of traffic with your signs and announcing the But it the event that this house is not the one the open house, but to create the most traffic, take a viewers want, you want to have items that they few more steps. Think about the advertising you take away from the open house that teach them want to do online, in the neighborhood and on so- about the benefits of home ownership, the home cial media now so you know what steps to take buying process, how financing works, special and when to take them. To this end, be sure to home buyer programs available in the area, and check out the Open House Tool Box on the even your special home buying programs, if for MAREI website for more marketing ideas: http:// example you offer lease to own. 18
  19. 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 George Z. Bai, Sr. - Owner Office (816) 356-1870 Cell (816) 210-4710 For Investors By Investors In this market, you want an agent on your side that has the knowledge, the ability, the EXPERIENCE, and the resources to help you! Do you have a house you need to sell? A wholesale 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:  After Repair Value $120,000 to $180,000  3-4 Bedroom, 1.5+ Bath  Basement & Garage Preferred  Like Post 1978, but will consider older Realty Resource  Cash Buyers, no Appraisals or Loan Qualification 115 E Gregory, KCMO 816-523-4400 www.RealtyResourceKC.comInvestment News Page 17
  20. 20. TRAINING HUD Homes It’s a Whole New REO World Date & Time May 14th Make small chunks of cash by wholesaling properties! 9-10 pm Join us and learn: Location  What is a HUD Home? 4540 Main  Where can you find out about HUD Houses? Kansas City, MO  How do you get inside of HUD Home? PHP  What do all those codes on the HUD website mean?  Do I need a Realtor or can I go it alone? 0 PHP  How do I make an offer on a HUD Home? Informational Only  What changed in the last year? Cost Members and Workshop offered by Realtor and Investor JJ Paw- Non-Members lowski with Chartwell Realty. FREE Register Online Crime FREE Housing FREE Phase One 8 Hour Seminar Date & Time The Advanced Management Techniques Seminar is a FREE 8 May 18th & 24th hour seminar that is Phase One of the three phases of the 1-4 pm Crime Free Multi Housing Program. Breakfast, lunch, and resource material are provided at no cost as well. Location The seminars generally last from 8:00 AM to 5:00 PM. The See Calendar agenda consists of 8 blocks of instruction. 2 Locations PHP  Screening  Drug Identification 2 Credit Landlord/  Leases  Meth Labs Tenant 6 Management  Evictions  Crime Prevention Cost 8 Workshop taught by Mid-America Crime Free Housing Free—Registration details online PHP CREDITS and affiliated Attorneys and Police Officers.Page 20
  21. 21. EVENTSMay Webinars Learning at Home May 24: 6 Business Building Webinars  The Top 5 Tech Trends and Tools Reshaping the Real Estate Industry  For Brokers, Managers & Marketing Directors, Shift: It’s More than Just Social Media  Five Simple Steps to Time Management & Organization  How to Dominate Your Market with the Power of Video  How 7 Agents are Using the Power of Facebook  Get the Listing . . . Priced right w/ KC’s Brad Korn MAREI Training Give Back Date & Time April 14th MAREI is looking to partner with local experts to create 1-4 pm workshops and trainings for our local members. Did Location you know that one of the best ways to generate new 115 E Gregory clients or people to bring you deals is to teach your spe- Kansas City, MO cialty and build credibility. Your students become your PHP customers or the new investors who will bring you 1 Credit Marketing deals. 2 Credits Mgmt Cost Members $39 Workshop taught by YOU from YOUR company shar- Non-Members $49 ing your many YEARS of Experiences. Register Online Investment News Page 21
  22. 22. Government Affairs  Qualified Residen-  Mortgage Interest tial Mortgage Deduction NAR has launched a website focused on the We have sent out several calls to action re- issues raised by the proposed rule defining a garding the possible discussion of the re- Qualified Residential Mortgage (QRM). The duction of the Mortgage Interest Deduction proposed rule is the first step in implementing that we have all benefited from as home a provision of the Dodd-Frank Act that requires owners for many years. This issue has lenders that securitize mortgage loans to re- been referred to committee, and your rep- tain 5% of the credit risk - unless the mortgage resentatives need to know your views on is a QRM or is otherwise exempt (for example, this when it comes time for them to voice FHA mortgages are also exempt). your opinions through discussion on the issue and possible votes. The proposed rule includes a very tight defini- To find out more about this issue and to send tion of QRM: a 20% downpayment, low debt-to a letter to your representatives, please visit -income ratios, and other strict credit criteria. . . . You NAR opposes such a narrow definition due to don’t have to be a Realtor to Take Action. concerns that QRM-eligible mortgages will be- come the standard and limit the ability of re- sponsible consumers who maintain good credit and seek safe loan products to qualify for affordable mortgages.  Investor Issues There are many issue churning about in Gov- Learn more at NAR’s QRM website: http:// ernment Halls across the country. Locally MAREI has partnered with two services to bring you the latest information about po- tential legislation:  Water Department  State Net Capital Journal: Tracks Issue across the nation and is updated each The Kansas City Water Department is strug- gling to resolve issues that they are not week our state capitals are in session. quite sure are issues. In an effort to assist  Powers Report: Tracks Issues in Jefferson them identify problems, MAREI is collect- City alone. We update weekly as long as ing data from our members. We have a they are in session. start at  We are looking for a resource that tracks where we have assembled some specific Topeka only, if you know of one, please issues. We need your help, you can com- email us at ment to the post with your own issues or To read the latest update visit email them to legislation-trackingPage 22
  23. 23. May 7 Community Donation Day for Habitat for Humanities Re- storeMay 8 Holiday Mother’s DayMay 8 Networking Lee’s Summit Investor Breakfast CALENDARMay 9 Deadline To Reserve Vendor Table for Tuesday’s Meeting Details, Times, Locations, Cost & Registration at www.MAREInet.comMay 10 Meeting Monthly Meeting: Top Problems of today’s real estate investor JJ Pawlowski 1 Credit PHPMay 11 Networking Commercial Investors GroupMay 14 Community Donation Day for Habitat for Humanities Re- storeMay 18 Workshop Mid-America Crime Free, Free Housing Phase One Seminar: 8 Hour Training 8 Credits PHPMay 21 Community Donation Day for Habitat for Humanities Re- storeMay 23 Chicago FREE One Day Workshop: Larry Goins & Alan Gowgill—Real Estate Day TradingMay 24 Workshop Mid-America Crime Free, Free Housing Phase One Seminar: 8 Hour Training 8 Credits PHPMay 24 Webinar Afternoon of Training WebinarsMay 25 Community KCRAR Community Event: Shredding PartyMay 25 Networking Commercial Investors GroupMay 28 Community Donation Day for Habitat for Humanities Re- storeJune 4 Community Donation Day for Habitat for Humanities Re- storeJune 7 Webinar NAR: How to become a marketing expert and have your phone ring off the hookJune 8 Networking Commercial Investors GroupJune 9 Webinar Understanding & Applying the Uniform Ap- praisal DatasetInvestment News Page 23
  24. 24. Market Trends Kansas City Market Data ―Aspiring homeowners should focus their energies on locking down a low mortgage rate sooner than later. While home prices are unlikely to return to pre-crash lev- For a good overview of market activity, every month on about els, today’s low interest rates will likely rise thanks to in- the 15th market stats recapping the prior months activity are flation and spikes in the Fed rates,‖ notes Shuman. ―As posted on Links to many prior months reports the government wind downs its role in the mortgage mar- are also posted for reference and comparisons. Go online for the full report, a brief summary of which (from the most-recently kets higher mortgage interest rates will be inevitable.‖ posted stats for March 2011) shows:  An average combined (new and existing) sales price of Read the full report on $149,984, 5% lower than March 2010.  Renters Lack Affordable Options Combined home sales of 1,884, 47% higher than the previ- ous month.  Combined home inventory of 16,808, virtually no change Harvard study says today’s renters lack affordable housing op- from March 2010. tions. In the past, people who were struggling to pay rent and Supply of homes on the market (calculated by dividing inventory utilities were measured by the 30 percent rule. If you spent by the 12-month average of the number of sales) was 8.9 more than 30 percent of your income on housing costs, you months for combined new and existing. This represents a mar- were considered to have heavy housing cost burdens. The ket favoring buyers since the supply exceeds 6 months. study shows that now 1 in 4 are spending more than 50%. We are also seeing that apartment owners are seeing growth in Homeownership Affordability Trulia reveals trend towards homeownership where affordability rentals around the country and we expect the strain on rentals to grow as new renters both people growing up and moving out as well as people being foreclosed on come into the market and to buy versus rents extends to almost four in five major US cit- very little new supply being built. And there is further strain with ies. This is a study of the 50 largest cities to find if it is more shrinking supply in housing stock. More demand, causing favorable to rent or to buy. The Rent V Buy Index last quarter higher rental prices. Read the full article on MultifamilyExecu- revealed that in 72% of the largest 50 cities, it was more advan- tageous to buy that rent a two bedroom home. Because of ris- Inflation Watch ing rents, falling home prices and low mortgage rates, we find that only 3 cities that renting is more favorable. Those three cities New York, Fort Worth and Kansas City. Inflation is very important to the Real Estate community be- Some things to consider ―With home prices nearing a dou- cause it ultimately affects mortgage rates and the ability of ble dip and more foreclosures expected to flood the hous- home buyers to purchase a home. The report from the econo- ing market over the next two years, the decision between mists at the National Association of Realtors tells us that if the fed lowers interest rates to stimulate the economy, we could renting and buying a home across most of the country see more buyers, but we can also see raising prices. We see has clearly moved in favor of buying,‖ says Ken Shuman, this in the media quite often of late. Only now that as we are Head of Communications at Trulia. ―As we head into the seeing inflation they are talking about raising interest rates to summer buying season, those looking to buy a home curb the inflation. Prices are inching up in consumer prices should be encouraged by improvements in the market quite a bit in energy prices, computers, household furnishings, and feel optimistic about their chances of finding an af- and more. So economist with NAR and in the media expect the fordable home, much more so than in previous years.‖ fed to increase interest rates, reducing the number of buyers. To read the full report, visit 24
  25. 25. See all properties on the classified page on MAREInet.comOffered As Address City Price Bed/ Contact Phone BathTurn Key 5 Single Family Kansas City, MO $250,000 Assort Kim Tucker RR 816-523-4400Turn Key 5 Single Family Kansas City, MO $175,000 Assort Kim Tucker RR 816-523-4400Turn Key 5 Single Family Kansas City, MO $198,500 Assort Kim Tucker RR 816-523-4400Fixer 3914 Norton Kansas City, MO $10,000 2/1 Christoph Becker 816-419-1165Fixer 2315 E 60th St Kansas City, MO $21,500 4/1 Christoph Becker 816-419-1165Turn Key 5632 Highland Kansas City, MO $34,750 3/1 Anne Sieg KW 816-918-0840Short Sale 4630 Mersington Kansas City, MO 5/1 Eric Deeter RR 913-579-3354Short Sale 608 W 101st Tr Kansas City, MO $78,000 4/2 Eric Deeter RR 913-579-3354Rehabbed 3305 Bellefontaine Kansas City, MO $32,000 3/2 Christoph Becker 816-419-1165Turn Key 5 Single Family Kansas City $190,000 Assorted Kim Tucker RR 816-523-4400Seller Fin 3 Single Family Kansas City, MO $150,000 Assorted Kim tucker RR 816-523-4400Rental 5404 Euclid Kansas City, MO $22,500 3/1 Christoph Becker 816-419-1165Rehab 8129 Wayne Kansas City, MO $54,500 3/2 Eric Deeter RR 913-579-3354Rehab 2315 E 60th St Kansas City, MO $24,500 4/2 Christoph Becker 816-419-1165Fixer 4418 Forest Kansas City, MO $19,500 4/2 Christoph Becker 816-419-1165Fixer Grandview, MO $25,000 4/2 Frank Janssen 816-359-3337Rental 4210 E 54th St Kansas City, MO $42,000 4/2 Frank Janssen 816-359-3337Fixer 5617 Lydia Kansas City, MO $20,000 3/1 Christoph Becker 816-419-1165Leased 2128 E 83rd Kansas City, MO $39,000 4/2 Frank Janssen 816-359-3337RTO 1917 SE Picadilly Blue Springs, MO $118,000 3 / 2.5 Frank Janssen 816-359-3337Fixer 2508 Chelsea Kansas City, MO $12,900 3/2 Eric Deeter RR 913-579-3354Fixer 5434 E 27th Tr Kansas City, MO $10,850 2/1 Eric Deeter RR 913-579-3354Turn Key 10 Single Family Kansas City $344,000 Assort Eric Deeter RR 913-579-3354 Investment News Page 25
  26. 26. Repositioning For BIG Profits If you would like to justify and increase in Structural: This option is usually rents or increase the value of your multi- more involved. When doing a struc- family property, one of the main ways this tural repositioning it involves some is done is through a process called of the following: changing mechani- "Repositioning." Most people are familiar cal systems, adding decks, chang- with rehabbing a property, but reposition- ing the layout, or constructing new ings can be much more than just a physi- amenities such as pools or exercise cal change to your property. rooms to capture additional reve- nue. This is typically much more Three ways you can reposition your multi- involved and can have a dramatic family property: impact on the property, but usually Cosmetic: Cosmetic changes consist has the highest cost and is the of changing the aspects of the most disruptive to your current ten- property to increase its appeal such ant base. as landscaping, restriping and re- Operational: This option consists of surfacing parking lots, painting, changing the way the property op- adding signage, or changing interior erates. Typically it can include or exterior finishes. It is the easiest changing management companies and least involved strategy and it or managers, removing troubling can have a dramatic impact on how tenants, bringing in a different type your tenants feel when they arrive of tenant with more disposable in- at your property and decide how come, increasing occupancy, or much they are willing to pay each adding additional revenue opportu- month to live there. nities such as laundry rentals, car- ports, etc.Member Expert: Spencer Cullor Why reposition? – Highest and Best UseDirector of Commercial Acquisi-  Increase Income: A higher qualitytions with Cullor Properties. property attracts a tenant with more dis- posable income who may be willing to pay913.324.5900 more to live there, allowing you to in- crease rents or realize additional streams such as renting carports, or laun- dry machines, resulting in more cash flow.Look for Spencer on Facebookand Twitter.  Control Expenses: By replacing old energy inefficient HVAC systems, or add- (Continued on page 27)Page 26
  27. 27. ing a utility bill-back program and have a plan. positionings take time andor individual utility meters, money. A minor repositioning Potential pitfalls to avoid:you can decrease your ex- can range between $1,000penses as you pass more of  Over-improving the and $3,000 per unit. More ex-them over to the tenant, in- property: You need to have a tensive rehabs can cost up-creasing revenue and lowering good understanding of who wards of $10,000 per unit.expenses. your tenant is. If you are in C- Make sure you have the Class area with mostly service money to finish the job prop- Force Appreciation: By employees and you have re- erly once you get started.increasing income and con- habbed your apartments to be There is nothing worse thantrolling expenses you can fit for celebrity clientele, your cutting corners because youforce appreciation and in- tenants will love you, but you ran out of money halfwaycrease the value of your prop- wont be able to meet your through.erty dramatically. Remember, rental income goals.just a $10 per month increase The recipe for repositioningin income or decrease in ex-  Thinking you can always successpenses across 100 units can change the class of a prop- Repositioning can be one ofincrease your income by erty: If you have a 1960s the fastest ways to increase$1000 a month and at a 10% property in a C-Class rents on your property, lowerCapitalization Rate (CAP Rate) neighborhood, almost no expenses, and lower the man-increase the value of your amount of upgrades is going agement burdens, resulting inproperty by over $120K. to change it into a B-Class an increased net operating in- property. come and less managementEase of Management: Whenword gets out that a property  Making unrealistic as- headaches. You can com-is being improved and has sumptions on how much pletely rehab the property, orgreat management, it attracts you can raise rents: You just change some paint colors,more reliable tenants that will, must understand what your or management. Whicheverin return, take better care of competition is offering and option you chose, you need totheir individual apartments. have solid data backing up have a well thought out planThis will result in increased your rental rates. What are backed by research and realis-occupancy, increased rents, similar properties renting for? tic expectations. With a clearlower turnover costs, de- Return on investment needs plan in place, repositioningscreased rent delinquency, and to be a major driver. can be the fastest way to in-fewer service requests. Not crease your cash flow and add Underestimating the cost significant value to your prop-only does this save you of the repositioning: Re-, it also makes theproperty easier to manageand more profitable to own. Track Foreclosures Lead ListsWhy isnt everyone doing it? Complete Details Pre-Notice of DefaultYou might ask yourself, if re- Pre-Foreclosurepositioning a property is so Including Addresses Affluent Consumergreat, why isnt everyone do- Jackson, Clay, Platte Free & Clear Homeownering it? The simple answer isthat not all properties will EZ Data Group Foreclosure Absentee Ownersbenefit equally from reposi- Newly Listed Homestioning. You need to under-stand the market, know your New Business leadscompetition, do your research Custom Consumer Leadsto figure out if a repositioningis the right strategy for you, EZ Data Group Leads Investment News Page 27
  28. 28. Squeeze Your Membership! Besides all the awesome networking and exceptional speakers at the monthly meetings, are you taking advantage of everything MAREI has to offer you? As a member of MAREI you have a ton of benefits avail- able, all as a part of your annual membership dues:  Message Board: Did you know that when you post a message on the message board it goes out to all members who have valid email addresses?  Classifieds: We post every property that is in our classifieds at least once in the monthly newsletter and blast it out to the email database at least once.  Home Depot: A biannual rebate of 2% on your net purchases at the Home Depot and the Home Depot Tool Rental. We have seen several $300 checks here in Kansas City and one in Florida for $3,000 with this program for 6 months of purchases.  Sherwin-Williams: One of the most popular and easiest used. Take your discount card for up to 40% off on paint, paint supplies, & equipment, and where available floor coverings, and window treatments. Card included in your membership package.  FedEx Office: Up to 22% off shipping and up to 20% off on copy- ing and printing services at any Fed Ex Office.  Office Max: From printing & binding, to finishing & customization. Plus all your office supply needs. Offering discounts of up to 60%.  Market your rental property online, for fewer vacan- cies on a top ranked website. Offering 20% discounts off regular price.  AAA Screening: Get exceptional screening service for all your tenants, contractors, and employees. Discounts on registration and all searches.To access discounts, obtain codes, or to registeras needed, see instructions on the Member Dis-counts Page in the Member Area!