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MID-AMERICA ASSOCIATION OF               REAL ESTATE INVESTORS




 Investment News                      NETWORKING : EDUCATION : COMMUNITY
Read Online www.MAREInet.com/Newsletter                        March 2012




    SELLER FINANCING
    Non-Performing Notes
    SHORT SALES              MARKETING            SHORT SALES
     Disclosing Intent        Right Message
BUSINESS MEMBERS
                    ADDRESSING THE NEEDS OF
                    THE REAL ESTATE INVESTOR
Type         Company                          Web                    Phone          Contact

Insurance    APIA                             REOIns.com             877-752-2742   Lisa Goodner

Lender       Argentine Federal Savings        ArgentineFed.com       913-402-1500   Ann Wilkinson
Partnering   kcmoHomeBuyer                    kcmoHomeBuyer.com      816-523-4400   Don Tucker

Prop Mgr     Abraxas Prop Mgmt                AbraxasMgmt.com        816-474-8800   Meka Cayce

Prop Mgr     Jamieson Home Team               JamiesonHomeTeam.com   816-503-4671   Kevin Jamieson

Prop Mgr     Premier Leasing                  MyPremierLeasing.com   816-841-9500   Jeff Woods

Realtor      Realty Resource                  RealtyResourceKC.com   816-523-4400   Kim Tucker

Security     Devcon Security                  DevconSecurity.com     913-907-4942   Marian Collins

Staging      ShowHomesKC                      ShowHomesKC.com        770-853-3506   Amanda Palomba

Supplier     Canyon Stone                     Canyon-Stone.com       913-254-9301   Matt Puckett

Title        Accurate Title Company           AccurateTitleco.com    913-338-0100   Jackie White




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                                                           www.MAREInet.com/Services


Page 2                                                                              MAREInet.com
Contents
              MAREI News
                                             In This Issue
                                             Business Members                                      2
                                             Contents                                              3
                                             Fine Print                                            4
                                             Staff                                                 5
                                             Directors Notes—Non-Performing Notes                  6
                                             Disclose Intent on Short Sale Flips                   8
                                             Member Benefits at a Glance                          10
                                             Seller Financing to the Rescue                       12
                                             Alternative Financing Workshop—March 17              15
                                             Welcome New & Returning Members                      17
                                             Marketing: You Get What you Ask For                  18
                                             Calendar of Events—SubGroups                         22
                                             Investment Properties                                24
                                             Tips for the New Website: Posting Property           26
                                             Join Now                                             28



 March Meeting
 Jump Start Your Investing!                             Pre Meeting in March
 Get started on the right foot with Short
                                             We have a search engine friendly property marketing
 Sale Real Estate Investing. Presented by
                                             tool on the new website. Fairly user friendly too, but
 veteran MAREI members Donna Wilson and
 Laura Bullock.                             you might need some tips to get you started in the right
                                              direction. Come early on the 13th for our 5:30 Pre-
 Tuesday March 13th., from 6 to 9
                                             Meeting to find out how to most effectively post your
 - New Member Orientation at 6:30                  properties for investor buyers on our site.
 - Speed Networking at 7:15


Investment News                                                                            Page 3
MAREI
                                                             Notes
             2011        Contact Information
         National REIA
                         PO Box 8685, Prairie Village KS, 66208
           Awards of     Phone: 913-815-0111

          Excellence
                         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

         Honors          matters concerning real estate and other investments.



                         Content Disclaimer
         Of Merit        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.


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Page 4                                                                                                    MAREInet.com
MAREI
Kim Tucker 816-523-4400
Director
Kim@MAREInet.com
                                                         Staff


                                                         Scott Tucker
Don Tucker 816-523-4400       John Welchert
                                                         Meeting Ambassador
President                     Meeting Ambassador
                                                         STucker319@gmail.com
Don@MAREInet.com              816-522-0002




Steve Burns                   Dan Goodwin 913-642-5218   Shelda Goodwin
Audio Visual                  Meeting Ambassador         Meeting Ambassador
cashflowtreasures@gmail.com   DanGoodwin@kw.com          SheldaGoodwin@kw.com




L. Scott Ficinus, SFR, WHS    Debra Felderhoff           Michelle Winberry
Meeting Ambassador            BS, LS, Indep Subgroup     Weekly Wednesdays
Scott@Ficinus.com




  Investment News                                                               Page 5
Director’s
                                                                 Notes
       Back in early January the phone rang and on the        months sell it for a profit as a performing asset.
     other end was Jeff Merrick . Jeff works for several
                                                                 In the next scenario, the borrower says “We
         companies that sell bulk packages on notes. It
                                                                have been trying to work a short sale, but the
        turns out that he knows Eddie Speed, our guest
                                                               bank would not work with us. If we could pay
       trainer for March on note buying , and even sells
                                                              just $10,000 less than what we owe, we could
            quite a few notes through Eddie’s Company
                                                                sell it.” So if they owe $100,000 and you just
                                      Colonial Funding.
                                                              bought the note for $75,000, you just made an
        Anyway, Jeff and I had a lengthy conversation                                           easy $15,000.
       about the buying of Non-Performing notes. You
                                                             His last scenario is the borrower says “We have
          see when a home owner does not make their
                                                                    been trying to deed the house back to the
         mortgage payments and it is still on the banks
                                                             lender, but they would not work with us, can we
      books, it is usually classified as a non-performing
                                                                   deed the house to you?” That gives you a
     note. And Jeff said we can make some awesome
                                                              house almost immediately with out the hassles
     deals with non-performing notes, if you know what
                                                               of foreclosure that you can now resell or rent.
                                            you are doing.
                                                                   Many of the issues right now stem from the
          He had three typical scenarios for this type of
                                                             mega banks being unwilling or unable to negoti-
     note. All include buying the note for a discounted
                                                             ate to with the borrower. Because you would be
      price due to the fact that the borrower is not pay-
                                                             a small lender dealing with one or two loans that
        ing, the more notes you buy, the larger the dis-
                                                             you purchased for a large discount, you are in a
                                         count it seems..
                                                               position to work with them and resolve their is-
        His first scenario is that you buy the note at the     sues and creating a win-win situation for all in-
      steep discount. Then call the borrower up to ask       volved. Before you start tackling buying notes,
        why they are behind and they say something to           especially non-performing notes, be sure you
          the effect of “With the increase in real estate                            know what you are doing.
       taxes, insurance cost and interest rate adjusting
                                                             This concept has intrigued me for several years.
      the payments are just too high. If we could elimi-
                                                               So please join me at the Note Seminar on the
      nate all of our late payments and start fresh, with
                                                              17th. We are going to be taking a ton of notes!
     a lower interest rate and amortize it for another 30
        years we could make payments easily. But the                                     Kim Tucker
       bank would not work with us.” Because you are
     now the bank, and bought the loan for pennies on
      the dollar, you are in a position to work with them
                                                                                                  Director
          and make this a performing loan and in a few



Page 6                                                                                    MAREInet.com
accurate



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                                                Property Management
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   Real Estate Owned / Forced Placement             Kevin Jamieson

     For Investors & Finance Institutions           816-503-4671




 Investment News                                                            Page 7
Should You Disclose Intent
    On Short Sale Flips
     Short sale flips – the process of shorting a property     In essence, this is no different than a regular
     then reselling it for a cash profit in a simultaneous     wholesale flip except instead of paying off seller’s
     closing – has been taking heat lately from title com-     lender in full, investor pays off seller’s lender at a
     panies and real estate brokers. Realtor blogs are         discount.
     filled with drivel about how these transactions are
                                                               The Hoopla
     illegal or unethical. What’s the real truth?
                                                               Some Realtors and title companies think there
     The Basic Process
                                                               should be full disclosure to the lender and seller
     The process of the short sale flip works as follows.      about the resale of the property, otherwise the
                                                               bank and seller are being “defrauded”. In order to
     Step 1: Investor signs a contract to buy a house
                                                               be defrauded, someone must be owed a legal
     from a seller who is behind in payments.
                                                               duty of disclosure.
     Step 2: Investor contacts seller’s lender to negotiate
     short sale
                                                               As far as disclosure to the seller, I see no issue
     Step 3: Investor gets lender to approve short sale        because the seller is not getting any money out of
     Step 4: Investor lines up backend buyer                   the deal either way. His lender will not agree to a
                                                               short sale while the seller walks away with money.
     Step 5: Investor closes with seller, paying off lender,   So any profit made by the investor is fair game.
     then resells to backend buyer in simultaneous clos-
     ing for a profit.                                         As far as disclosing to the lender that you plan on
                                                               reselling the property for a profit, of course you



                                                                           Don’t miss this event!

         Monthly Meeting
March Monthly Meeting:                  Agenda                More info and Registration
 Thursday March 13th, 2012,             5:00 Set Up                 http://www.MAREInet.com/March
    6pm to 9pm                           5:30 pre-meeting
   Career Education Systems,            6:00 check in
   FREE for members, Guests             6:00 vendor hall
    $25 at the door, $15 if you pre-
    register                             6:30 new member orientation
   Getting Started as an Investor,      7:00 mini speed networking
    focus on Short Sales                 7:15 Donna Wilson/ Laura Bullock




Page 8                                                                                        MAREInet.com
are going to do that. That’s what       “Consumer Protection”. Exactly         that the package is 100 pages long
investors do – they make a profit.      which bank is the consumer??           and the bank’s loss mitigator is
                                                                               probably not going to read the con-
If you planned on keeping the           Disclosure
                                                                               tract in detail, but who’s fault is
property as a killer rental instead
                                        Chances are this will end up in        that?).
of flipping it, there would be no is-
                                        court someday and a jury will have
sue. If you fixed the property up                                              Should you further disclose in your
                                        to be convinced that failing to tell
and sold it 3 months later, there                                              cover letter to the lender that you
                                        people you are reselling your prop-
would be no issue.                                                             have a buyer lined up to resell the
                                        erty for a profit is somehow a fraud
                                                                               property to at a higher price?
For some reason everyone gets           upon the lender or the seller. No-
upset because you are flipping it       body wants to be the test case, so     Maybe. Maybe not.
an hour later for a profit.             I think that to be on the safe side,   Article written by Attorney William
In other words, what exactly trig-      your contract with the seller should
gers a duty to disclose to the          clearly disclose that you intend to
lender that you intend to make a        resell the property for a profit.
profit? Well, in at least one state     “Buyer may resell the property in a
(Colorado), the law now requires        simultaneous closing for a higher
you to disclose if the resale is in-    price and make a profit.”
tended within 14 days. This re-
                                        This covers the seller, but what
quires an all-cash closing on the
                                        about the lender? Well, the lender
front end with no back-end con-
                                        gets a copy of the contract in the
tract signed until day 14, risking
                                        short sale package the investor
the loss of your back-end                                                      Bronchick, Investor and Founder
                                        submits to the lender. This puts
buyer. Geniuses at the Colorado                                                of the Colorado Association of
                                        the bank on notice (We all know
Legislature passed this law under                                              Real Estate Investors.



                                                              First 100 Attendees
                                                                To March Meeting
                                                        Receives a FREE Copy of the
                                                                 April 2012 Issue

                                                PERSONAL REAL ESTATE
                                               INVESTOR                                  MAGAZINE
                                             Subscribe http://www.MAREInet.com/PREI


  Investment News                                                                                         Page 9
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Page 10                                                                                               MAREInet.com
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  Investment News                                                                                     Page 11
Seller Financing
                        To the Rescue
      How Investors Can Profit from the Emerg-           more quickly and at higher prices. That’s be-
      ing Solution to the Real Estate Crisis             cause it offers a much larger pool of potential
                                                         buyers.
      As a real estate investor, you know all too well
      that the mortgage industry is suffering from a     With safe seller financing, you underwrite
      major meltdown. Too many institutions have         loans before they are made, and then manage
      been lending money in a blind, reckless way.       them thereafter. You must learn how to iden-
      Lending institutions are folding, foreclosures     tify and qualify capable buyers who are ex-
      are reaching record highs, and subprime lend-      cluded from traditional mortgages as a result
      ing has caused a catastrophe for property sell-    of today’s tightened underwriting standards
      ers, buyers, and lenders alike.                    and the diminishing number of conventional
                                                         lending institutions.
      As a result of today’s credit crunch, there’s a
      limited pool of qualified buyers and a shrinking   Seller financing is fast emerging as the solu-
      supply of conventional lending sources. In addi-   tion to the collapse of many lending institu-
      tion, there’s a growing number of would-be         tions, and the shrinking supply of financing
      buyers who can no longer obtain conventional       available from those that survive. For you, the
      loans—and an abundance of properties on the        real estate investor, it could very well be the
      market at low prices.                              key to your survival in this business.
      Seller financing is coming to the rescue. It’s     Seller Financing Goes Mainstream
      filling the void created by the mortgage crisis,
                                                         After the high-interest rates of the 1980s,
      offering an alternative to those hard-to-come-
                                                         seller financing became a specialty niche
      by conventional loans. But seller financing can
                                                         among real estate transactions. The upheaval
      do more for the real estate investor than just
                                                         in the housing market, however, is now creat-
      move property. For one, it can sell property
                                                         ing an extraordinary demand once again for
                                                         this alternative funding source.
                                                         Consider this: two years ago, seller financing
                                                         accounted for about 1 in every 400 real estate
                                                         transactions. Today, it accounts for 1 in every
                                                         50 transactions. What’s more, some real es-
                                                         tate experts predict that seller financing will
                                                         soon become the financing vehicle for one out
                                                         of every ten real estate transactions. Not
                                                         since the 1980s, have I seen the extraor-
                                                         dinary increase in, and necessity for,
                                                         seller financing.
                                                         What does this mean to you? Seller financing
                                                         provides you the opportunity to sell your prop-
                                                         erties to quality buyers, at the full retail prop-
                                                         erty values and more quickly, for a substantial
                                                         and steady income stream. The smart real es-


Page 12                                                                              MAREInet.com
tate investor will become adept       falls that brought down many         the place and fled? With fal-
at using this method. Indeed,         lending institutions, however, the   ling prices in the housing mar-
your level of success will likely     investor must weigh the risk of      ket, even the equity might be
depend on how well you use            each loan and proceed only with      reduced. The seller/lender
seller financing.                     those that present a high likeli-
                                                                           gets stuck with unpaid bills
                                      hood of success. That means be-
For Quality, Qualify                                                       and costly repairs. The honey-
                                      ing meticulous about qualifying
Qualifying for a conventional         the buyers and lending only to       moon is over.
mortgage today is much more           those of the highest caliber.        Like fiancés, borrowers are
difficult than it was just a few                                           emotionally involved with the
                                      From This Day Forward . . .
years ago. As a result, there are
                                                                           transaction and might not
many more quality candidates for      Most people enter into seller fi-
seller financing than there were      nancing contracts with the same
                                                                           view their situation objec-
in the past. These are people         enthusiasm with which they enter     tively. Even well-meaning
who’ve been rejected by conven-       into marriage. They’re as happy      buyers might believe they can
tional lending institutions, in       at closing as newlyweds at the       afford to commit to a long-
part, because less money is           altar. Everybody’s eating the        term loan without realizing all
available. More restrictive under-    cake and tossing the rice. But if    the responsibilities and ex-
writing criteria are in effect,       the commitment is based solely       penses they will incur, nor
which disqualify countless candi-     on blind faith, the relationship     their ability to meet those ob-
dates who have both a willing-        may dissolve faster than ice in      ligations. Equally excited
ness and the ability to meet the      the punchbowl.
                                                                           about closing the deal, the
requirements of the loans. In ad-
                                      No investor finances his property    seller might be blind to the
dition, many other would-be buy-
                                      for a buyer with the belief that     potential risks in doing busi-
ers have had hardships that
                                      the arrangement will turn sour.      ness with a particular buyer.
they’ve since overcome.
                                      At most, it’s considered a remote
Together, these factors contrib-      possibility with tolerable conse-    Other investors recognize the
ute to a startling fact: As many      quences. If the buyer defaults on    risks but believe they can
as 50% of the people who              the loan, the investor assumes       sidestep a foreclosure action
would have qualified for a            that he can simply annul the         by having the buyer pre-sign
conventional mortgage just            deal, repossess the property, and    a deed back to them at clos-
two years ago no longer do.           avoid any loss.                      ing. That would be an invalid
True, there had been much reck-
                                      But this assumption is flawed.       deed because the buyer can-
less lending to risky borrowers in
                                      The buyer has occupied the prop-     not waive his future rights.
recent years. But since the
                                      erty for months, perhaps years.      But there is no protection for
shakeout in the lending industry,
                                      What condition is it in now? Have    the seller in case the arrange-
many good candidates are now
                                      the taxes been paid? Are the in-     ment goes sour. Seller financ-
being denied the opportunity to
                                      surance premiums up to date?
borrow money.                                                              ing doesn’t come with a pre-nup.
                                      Has the buyer kept up with the
Seller financing is the ideal solu-   routine maintenance and repairs?     Clearly, the smart approach is to
tion for these people and inves-      Or, as in the case of some fore-     learn all you can before you’re
tors alike. To avoid the same pit-    closures, has the buyer trashed                         (Continued on page 14)




 Investment News                                                                                   Page 13
(Continued from page 13)                                    with dating; it’s smart with lending.
                                                            Likewise, real estate sellers should evaluate their
                                                            seller-finance candidates with this same level of
heavily invested in the relationship.
                                                            scrutiny. Yet too often, they fail to conduct due
A Safe Bet                                                  diligence. This careless approach results in count-
                                                            less defaults and creates the impression that
How risky is seller financing? Much lower than it used
                                                            seller financing is riskier than it should be.
to be. In the past, would-be borrowers paying on
seller-finance mortgages were, as a group, much             The savvy investor will ensure good underwriting,
riskier than they are today. That’s because it was          not only to achieve a smooth and successful
easy, too easy, to obtain a conventional loan. People       transaction but also to maximize the cash value of
who failed to qualify for traditional mortgages were,       the note. Most note holders don’t realize that the
by definition, the riskiest borrowers.                      number one variable that affects the cash value of
                                                            their note is the buyer’s credit. So not only does
Lending institutions have since tightened their crite-
                                                            disciplined underwriting mean a more trouble-free
ria, making it far more difficult for would-be buyers to
                                                            loan, you also create a more salable loan in the
borrow money. As a result, more people are now pur-
                                                            future, and one that’s worth more.
chasing property with seller financing. Squeezed out
of conventional lending, formerly qualified applicants      To help ensure a profitable relationship with your
are increasing in number and anxious to buy prop-           borrower, then, you must perform due diligence.
erty. This raises the quality of the typical seller-        The independent investigation will assess the ac-
finance candidate.                                          curacy of your buyer’s statements regarding as-
                                                            sets, income, employment, debt, and so forth.
Many are “just missed” borrowers who now fall nar-
                                                            Due diligence allows you to make sound decisions
rowly outside the newly tightened criteria of lending
                                                            based on solid facts, not subjective impressions.
institutions. These are reliable, low-risk prospects
                                                            It allows you to distinguish the quality borrower
who show every intention of meeting the terms of
                                                            from the risky one. And you can then create a
their loans, and they have the ability to do so. They
                                                            more valuable loan.
would have easily qualified for conventional mort-
gages in the past but no longer “measure up” on pa-         Ronald Reagan said it best with his signature
per.                                                        phrase, “Trust but verify.”
What the savvy investor must do is differentiate be-        You Can Bank on It!
tween those deserving buyers and the obviously risky
                                                            Using another analogy, imagine that you’re con-
ones. Your success will depend on the thoroughness
                                                            sidering buying stock in a bank. Despite the
by which you investigate each prospect and then use
                                                            bank’s history of solid performance, let’s say it
sound judgment when deciding whether to offer seller
                                                            now decides to relax its due diligence procedures.
financing.
                                                            This saves both the time and expense of verifying
I Do Diligence                                              the loan applicants’ statements and examining
                                                            other sources of pertinent information. With less
Returning to our marriage analogy, approving your
                                                            stringent requirements, the bank is now able to
seller-finance candidate is a lot like choosing your life
                                                            qualify more borrowers and process more loans.
partner.
                                                            Risky loans. Now here’s the question: Would you
Few people enter marriage without having first gath-        want to own stock in that bank?
ered considerable information about their mate. It
                                                            Unfortunately, many property owners enter into
starts with that first encounter, when your date pre-
                                                            seller-finance contracts with that same, careless
sents himself or herself in the best possible light. He
                                                            approach. They don’t pull a credit report, verify
appears honest; she seems responsible. As you get to
                                                            income statements, examine the employment his-
know each other, you like what you see and you want
                                                            tory, or investigate the buyer’s liabilities. It’s like
this to work. You make plans.
                                                            eloping on that first date.
Smart couples approach the altar having already dis-
                                                            When you seller finance, you’re buying stock in
covered and judged their fiancés’ background, char-
                                                            your own bank. Make sure you can bank on your
acter, values, strengths, and weaknesses. They con-
                                                            decisions.
duct their own due diligence before their “I do’s.”
Many singles even hire a private investigator to do an      You can be extremely successful in this business,
independent background check on their potential             if you use a methodical approach that calculates
mate before proceeding with the romance. It’s smart
                                                                                                    (Continued on page 16)




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Investment News                                                                                Page 15
(Continued from page 14)                                     is find them.                        the property (your basis), the
                                                                                                  less risk you can afford to take.
                                                             The Basis Basics
the risk and weighs the benefit.                                                                  Let’s say you’ve invested
(Trust me, I know.) In addition,                             During my 28 years in seller fi-     $75,000 in that $100,000 prop-
it’s much more profitable than                               nancing, the question I’m most       erty. You’re now at a greater risk
sitting on an unsold property. But                           frequently asked by property         of losing more, if delinquency
seller financing does require that                           sellers is this: At what point       and default occur.
you understand some fundamen-                                should you make a very aggres-
                                                                                                  With a low basis you can lower
tal principles—and that leads us                             sive underwriting decision?
                                                                                                  your underwriting standards. I’ve
to our next analogy.
                                                             The answer depends entirely on       known and even consulted with
Playing Your Cards Right                                     how much you’ve invested in the      real estate investors who main-
                                                             asset. If it’s worth $100,000 and    tained a fairly liberal underwrit-
Let’s take this concept to Las Ve-
                                                             you’ve invested only $25,000,        ing practice. These transactions
gas. You certainly wouldn’t play
                                                             you have a “low basis.” With a       succeeded because the investors
Blackjack without first under-
                                                             low basis in a property, you can     had a low basis in their proper-
standing the rules of the game.
                                                             better tolerate a default risk.      ties. With an inordinately low in-
With that knowledge, for exam-
                                                                                                  vestment in the property, say 20
ple, you wouldn’t take a hit if you                          In a way, you’re like a pawn shop
                                                                                                  or 30%, you can tolerate the ad-
have 18 and the dealer shows a                               owner. You’ve taken as collateral
                                                                                                  ditional risk. This strategy, how-
4. Otherwise, what stays in Ve-                              an item whose value is far
                                                                                                  ever, is riskier and more chal-
gas is your money.                                           greater than the money you’ve
                                                                                                  lenging. It demands greater at-
                                                             loaned. If the transaction pro-
Yet a lot of people who offer                                                                     tention to detail, and requires
                                                             ceeds as planned, your customer
seller financing are gambling with                                                                more time and resources to ser-
                                                             repays the loan with interest, and
their own assets. That’s because                                                                  vice the portfolio. But if you have
                                                             you make a profit on your loan to
they don’t understand the basic                                                                   a low basis, you can apply lenient
                                                             him. If your customer defaults,
principles involved. Rather than                                                                  qualifying criteria and still be
                                                             you take possession of the collat-
analyze the risk and then judge                                                                   successful.
                                                             eral. Having invested only a frac-
wisely, they unwittingly close
                                                             tion of its retail value, you can    Seller Financing: It’s a Good
deals with high-risk buyers.
                                                             then sell it to someone else for a   Thing
Smart seller-financing is profit-                            healthy profit.
                                                                                                  Having purchased more than
able. There are plenty of aces in
                                                             That’s why the higher the per-       30,000 seller-financed notes, I’ve
the huge and growing pool of po-
                                                             centage of your investment in        seen a pattern of success and
tential buyers. All you need to do
                                                                                                  failures. These aren’t just theo-
                                                                                                  retical concepts. They’re the re-
                                                                                                  sult of actual experiences involv-
                      Get Your Own Free Copy                                                      ing a range of variables. With
                                                                                                  due diligence, good judgment,
                                                             Find out how you can profit.         and some common sense, you
                                                                                                  can become very successful
                                                                   Download your                  with seller financing. And the
    MAKING MONEY FROM                                                                             timing couldn’t be better.
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How to Profit from the Nation’s Growing Real Estate Crisis                                        people who deserve the opportu-
                                                                     Go Online to                 nity to own their own homes.
                                                                                                  They can afford to buy your
                                                              MAREInet.com/freeMMM                property, and they will make
                                                                                                  their payments on time. In addi-
                                                                                                  tion to your own success in this
                                                                   Information on                 business, you can provide a
                                                                March 17th Seminar                much-needed service that will
                                                                                                  help others. Are you ready to say
                                                             Go to Page 27 or online at:          “I do”?
                                                             MAREInet.com/EddieSpeed               By Eddie Speed, Note Business
                                                                                                  Expert & MAREI’sGuest Trainer
                 By Eddie Speed                                                                   on March 17th.


Page 14                                                                                                         MAREInet.com
New Members                                  Renewing
    Barry Bottemuller: Leawood, KS             Albert & Josephine Abraham: Shawnee

    Eric Buchman: Kansas City, Mo              Bemate Bomboma: Overland Park, KS

    Terry Carter: Freeman, MO                  Day Boswell: Overland Park, KS

    Perry Cashion: Lees Summit, MO             Michael Bryant: Lees Summit, MO

    Rene DeCrumpe: Kansas City, MO             Larry Christensen: Weatherby Lake, MO

    Joey Frey: Leawood, KS                     Ken Collyard: Shawnee, KS

    Kymberly Griggsby: Kansas City, Mo         Laura Johnson: Kansas City, MO

    Bret & Nancy Hoover: Independence, MO      Steve Lau: Overland Park, KS

    Ronald Ireland: Kansas City, MO            Lisa McKay: Overland Park, KS

    Lisa Rabbe: Kansas City, MO                JJ Palowski: Kansas City, MO

    Dale & Phyllis Steinman: Chanute, KS       Stephen Summers: Independence, MO




    Investment News                                                               Page 15
Marketing
       Seller-Finance




                   You Get What You Ask For!
  By W. Eddie Speed                                        sell the note, it’ll be a challenge to get a decent
                                                           price for it.
  Eureka! That moment of mutual exhilaration has
  finally arrived when your prospect says to you,          Many real estate professionals conclude that the
  “This is it!” He decides to buy your property—and        prospect pond is stocked with only the riskiest of
  you’re eager to sell it to him. But then reality hits.   candidates, since that’s the response they re-
  Your buyer’s application for a conventional loan         ceive from their ads. In fact, the quality of poten-
  is rejected. The deal falls through, yet again.          tial buyers seeking properties with seller financ-
                                                           ing is much better than you might imagine—and
  This scenario is becoming all too common, caus-
                                                           it’s improving. It’s the advertising that needs
  ing immense frustration for individual sellers,
                                                           help. By simply changing the wording of their
  realtors, investors, and buyers alike. But as I re-
                                                           advertisements, I’ve helped countless real es-
  ported in “Seller Financing to the Res-
                                                           tate professionals find better buyers.
  cue!” (Invest Magazine, Oct. 2008), there’s an
  alternative to conventional lending that addresses       The Right Pitch for the Best Catch
  these situations. Seller financing is filling the        To get the best results, your ads should reach
  lending void created by the mortgage meltdown            out to the best buyers. This simple strategy can
  and the credit crunch.                                   boost your real estate business big time.
  Success with seller financing requires smart mar-        Whether you’re using newspaper ads, yard
  keting. With the right marketing, you’ll be able to      signs, websites, email blasts, flyers, direct mail,
  identify and target your best prospects. You’ll be       billboards, Craig’s List, or any combination of
  able to interact with people who are not only ca-        marketing tools, market wisely. Specify the kind
  pable of meeting their repayment obligations but         of buyer you’re looking for.
  are most likely to do so.                                To use a fishing analogy: If you want to lure the
  To attract these low-risk buyers, I recommend an         prime candidates, you need to use the right bait.
  advertising method that is remarkably simple yet         Fish for anything that bites, and you’ll find your-
  powerful. It’s a technique that challenges the type      self unhooking the catch and tossing it back,
  of ads that are commonly used for seller financ-         again and again. Meanwhile, you’re wasting
  ing.                                                     your time and your tackle. As a real estate pro-
                                                           fessional, it’s what you hook—and keep—-that
  The typical seller-finance advertisement targets
                                                           counts.
  the broadest audience possible—and focuses on
  the least qualified candidate. The result is pre-        So, how do you “fish” for the best buyers? It
  dictable. If you use vague, all-encompassing ads,        starts with the bait. Or more accurately, the line
  you’ll attract buyers with lousy credit, zero assets,    that you use.
  sporadic employment, and/or substantial debt.
                                                               “Bad Credit? No Credit? No Problem!”
  Even if the property sells, it could take up to 20
  years of monthly repayments before you’ll know           Does this line sound familiar? Search it on
  whether you’ve made the right decision. Remem-           Google® and you’ll find more than 17,000 list-
  ber: you don’t get paid in full at the closing of a      ings. Earlier today, I even heard it on the radio.
  seller-financed transaction. And if you decide to        This copycat copy is so overused that it satu-


Page 16                                                                                        MAREInet.com
rates seller-finance marketing.          ing, you should ask yourself: Is this      candidates—and increasingly, bet-
Perhaps you’re even using this           the buyer I’m looking for?                 ter candidates are needing it.
line, or something similar, yourself.                                               Seller financing is also being used
                                         Good Guys, Bad Luck
                                                                                    to create far better loans on pricier
Worse, the bad-credit/no-credit
                                         Meanwhile, people with fairly de-          properties.
message speaks to the folks you
                                         cent financial circumstances will
least want to attract. It announces,                                                There are plenty of responsible,
                                         likely dismiss your ads. That’s be-
albeit unintentionally, “No qualifica-                                              capable people who would have
                                         cause until recently, “seller fi-
tions required!” If you can fog a                                                   qualified for a typical mortgage
                                         nance” or “owner will carry” ads
mirror, you can get a loan.                                                         only recently—and their numbers
                                         targeted the riskiest buyers and
                                                                                    are increasing. These just-missed
The fact is that you almost never        sold the least attractive properties.
                                                                                    applicants are being squeezed out
find good-credit buyers with a bad-
                                         As it emerges as a mainstream              of conventional lending because of
credit ad. Before spending one
                                         financing method, however, seller          changing market conditions, more
more dime on this kind of advertis-
                                         financing is attracting much better        restrictive qualifying criteria, a




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                 Section 8 Housing
                                                                   “Presentation is Everything!”
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                                                                            Canyon-Stone.com
                      Jeff Woods                                          550 E. 56 Highway, Suite B
                                                                              Olathe, KS, 66061
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          www.MyPremierLeasing.com                                          Phone: (913) 254-9300

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  Investment News                                                                                             Page 17
(Continued from page 19)                   your time chasing chancy deals             might have been turned down for a
                                           and getting frustrated by the out-         conventional loan only because of
shortage of available funds, and           come.                                      recently tightened lending prac-
personal circumstances that make                                                      tices. On paper, they’re labeled
                                           Back to my fishing analogy, you’ll
them look risky on paper.                                                             unqualified but just barely. These
                                           catch fewer fish with a more re-
                                                                                      prospects feel they deserve the
                                           strictive ad, but they’ll more likely
                                                                                      opportunity to buy the property
                                           be what you’re fishing for. You
The bad-credit ad looks like the                                                      they can afford because they know
                                           won’t waste your time and re-
seller is seeking desperate buyers.                                                   they’re honest and trustworthy.
                                           sources catching—and tossing
Many low-risk borrowers won’t                                                         They can—and will—meet their
                                           back—unqualified buyers. You’ll
even consider doing business with                                                     repayment obligations. Now, isn’t
                                           get what you advertise for.
someone who caters to the poor-                                                       that your ideal buyer?
est of prospects. What does that           Here’s a superb example of this
                                                                                      Why not ask for deserving buyers
say about the condition of the             principle. I knew a real estate in-
                                                                                      in your ads? This comes with a
property, the price the buyer will         vestor who was at the top of his
                                                                                      bonus: You’ll feel especially good
have to pay, or the terms of the           game. His advertisements offered
                                                                                      about being able to serve them.
loan?                                      properties for “only $500 down.”
                                           As a result, he attracted just what        The Low Down on High Down
Better-qualified people don’t rec-
                                           he asked for, plenty of buyers who         Payments
ognize themselves as risky bor-
                                           could afford only $500 down. Over
rowers, and they certainly don’t                                                      Over the years, I’ve known a hun-
                                           time, his buyers defaulted at a rate
lump themselves into that category                                                    dred or more seller-finance inves-
                                           that was three times that of other
of bad-credit types. They don’t see                                                   tors who buy mobile homes in
                                           buyers who paid significantly
themselves as the bad guys, but                                                       rental parks. They purchase them
                                           greater down payments. And he
good guys in a bad situation.                                                         for cash at rock-bottom prices, say
                                           probably missed out on some de-
                                                                                      $2,000 to $5,000 apiece. Then
They’re the retiree on a solid pen-        cent buyers in the process.
                                                                                      they spruce them up, and seller
sion whose employment history
                                           If you want qualified buyers, ask          finance them for substantially more
ended a decade ago. They’re the
                                           for them. You’ll filter out most of        than they paid for them. Appealing
career soldier whose income is
                                           the high-risk candidates before            to the low-credit/no-credit pros-
modest but reliable. They’re the
                                           you even hear from them. You can           pects, these investors attract
working woman who’s advancing
                                           spare yourself and your clearly            plenty of buyers. Risky buyers.
in her career and making final pay-
                                           unqualified prospects much                 Buyers with dreadfully low credit
ments on her college debt. They’re
                                           wasted time, expense, and disap-           scores who put little money down.
the “just missed” buyers who are
                                           pointment.                                 Without much skin in the game,
ideal candidates for seller financ-
                                                                                      these buyers have little to lose if
ing.                                       Serving the Deserving
                                                                                      they’re delinquent in their pay-
     Ask and Ye Shall Receive!             To attract the most viable candi-          ments or go into default.
                                           dates, there’s an even more dis-
So, how do you market seller fi-                                                      This can be a successful invest-
                                           criminating approach you might
nancing in a way that attracts                                                        ment strategy but only if you main-
                                           want to consider. You can appeal
these prospects? It’s simple. Just                                                    tain an extremely low cost basis
                                           to low-risk prospects with the
ask for them! Forget the vague                                                        and are prepared to deal with sig-
                                           word, “deserving.”
and desperate, I’ll-deal-with-                                                        nificant problems. When asked,
anyone ad. Instead, try something          “Seller Financing for Deserving Buyers!”   I’ve warned potential investors that
like this:                                                                            30% of their loans could go into
                                           This can draw an even better re-
“Seller Financing for Qualified Buyers!”   sponse, since you describe your            default. A colleague of mine tried it
                                           targeted prospect as not only a            and succeeded. After several hun-
 “Qualified Buyers: Owner Will Carry!”                                                dred deals, though, he told me I
                                           qualified buyer but a quality per-
Tell your prospects what the               son. I’ve seen excellent results           was wrong. The default rate was
“catch” is upfront. That way, you’ll       from such ads. Here’s why:                 only 29%.
spare the riskiest buyers the disap-                                                  If those are the odds you want to
                                           “Deserving buyers” recognize
pointment of a rejection while you                                                    play, go forth and multi-buy. But
                                           themselves in these ads. More-
encourage the best candidates to                                                      there’s a better method, one that
                                           over, they appreciate that you rec-
call. Better still, you won’t waste                                                   has proven quite successful by a
                                           ognize they’re out there, too. They


Page 20                                                                                              MAREInet.com
long-time real estate investor in       off a large debt are prime candi-        specific weakness. Bad Credit? No
Pennsylvania.                           dates for these transactions.            Credit? Problem!
Vince Sellers also buys mobile          Catering to this market requires         The Bottom Line for Top Dollars
homes on the cheap. But he              even more attention to your adver-
                                                                                 In your seller-finance ads, you
proves that with the right ad, you      tising message. Why not use an
                                                                                 should pitch to your most promis-
can find the right buyers. Vince’s      upscale, feel-good ad like:
                                                                                 ing prospects. Whether you want a
ads clearly specify what he wants:
                                           “Luxury Living for Deserving          qualified buyer, a deserving buyer,
   “Owner Financing with Large              Buyer: Owner Will Carry.”            a significant down payment, or
        Down Payment.”                                                           some other criterion, tell would-be
                                        Give Credit the Credit it De-
                                                                                 buyers what you’re looking for. Let
And that’s exactly what he gets:        serves!
                                                                                 them screen themselves out of the
buyers with $8,000, $10,000, even
                                                                                 running so that you don’t have to.
$12,000 in down payments. That
                                        Now let’s look at the secondary          Rather than sell them on your
alone covers his cost of the prop-
                                        market. As a buyer of seller-            property, position your offer so that
erty and provides him with some
                                        financed notes, the question I’m         they’ll want to sell themselves to
immediate profit along with it. The
                                        most often asked is, “What’s the         you. You’ll waste less time with the
only thing Vince does differently
                                        discount on this note?” This al-         decidedly unqualified, and can fo-
from his peers is this: He adver-
                                        ways leads me to a critical point:       cus on the quality candidates you
tises for what he wants.
                                        The buyer’s credit is the number         most want to do business with.
Premium Properties Enter the
                                        one factor that determines the dis-      If your phone rings less often, it
Seller-Finance Market
                                        count.                                   doesn’t matter. That’s because it’s
In general, seller financing has                                                 not the response rate but the con-
                                        Other variables that contribute to
been used for low-cost housing                                                   version rate that matters. So start
                                        the amount of the discount include
and land transactions. During the                                                asking for those quality buyers.
                                        the property itself (the collateral),
1980s, there was a notable excep-                                                You’ll have more quality transac-
                                        down payment, structure of the
tion. When interest rates on con-                                                tions as a result. Eureka!
                                        sale and note, seasoning (how
ventional loans soared past 18%,
                                        many payments have been col-             Suggested Pull Quotes:
owners of luxury properties turned
                                        lected), and loan documentation.
to seller financing. It allowed them                                             “The typical seller-finance adver-
                                        In all of my years of note acquisi-
to establish their own interest                                                  tisement focuses on the least
                                        tion, I can usually attribute the
rates, down payments, monthly                                                    qualified candidate.”
                                        note’s value to these factors. If the
payments, and terms of their
                                        note has a negative in, say, the         “You almost never find good-credit
loans. This flexibility allowed sell-
                                        seasoning, yet the other factors         buyers with a bad-credit ad.”
ers to offer affordable rates and
                                        are positive, it has the potential for
buyers to make their payments.                                                   “The buyer’s down payment alone
                                        a good price.
When institutional lenders dropped                                               can cover your cost of the property
their interest rates to more toler-     But of all of the factors that deter-    and provide immediate profit.”
able levels, expensive properties       mine the amount of discount, the
                                                                                 “The buyer’s credit is the number
began selling through conventional      buyer’s credit counts the most. In
                                                                                 one factor that determines the dis-
financing.                              fact, bad credit can be a deal
                                                                                 count.”
                                        breaker.
Rampant foreclosures at all levels                                               “It’s not the response rate but the
of the price spectrum are now           Let’s say you have two identical
                                                                                 conversion rate that matters.”
placing even luxury homes on the        scenarios, except one buyer has a
market at bargain prices. With the      credit score of 750 and the other’s      Learn more from Eddie Speed,
shortage of conventional mort-          is less than 550. That alone can         Founder of Note School®, at his
gages, especially jumbo loans,          affect the amount of the discount        all Day Training in Kansas City on
seller financing is making a come-      by 25% or more. And that as-             Saturday March 17th.
back on these high-end properties.      sumes there’s an offer to purchase       Details & Registration on
This offers tremendous profit po-       the low-credit note in the first
tential for the real estate profes-     place.                                   Page 27 or online at
sional. The just-missed buyers          This is yet another reason why you       http://www.MAREInet.com/notes
who have the wherewithal to pay         should avoid ads that cater to this



  Investment News                                                                                          Page 19
CALENDAR
                          events
                                                                                            ,




                      Locations, Cost & Registration at www.MAREInet.com/Calendar

Saturday, March 3rd                                7:15pm Presentation
   9:00am: Tax Free Wealth—All Day Semi-       Wednesday, March 14
    nar with Equity Trust, Airport Marriot.        9:00am   Sub-Group: Weekly Wednesdays
   4:00pm SubGroup: Blue Springs / Independ-   Saturday, March 17
    ence Real Estate
                                                   8:30am All Day Alternative Financing
Sunday, March 4th                                   Workshop, Career Education Systems
   9:00am: Sub-Group: Lees Summit Real Es-        4:00pm SubGroup: Blue Springs / Inde-
    tate Investors                                  pendence Real Estate
Wednesday, March 7th                            Sunday, March 18
   9:00am   Sub-Group: Weekly Wednesdays          9:00am Sub-Group: Lees Summit Real Es-
Saturday, March 10                                  tate Investors

   4:00pm SubGroup: Blue Springs / Inde-       Wednesday, March 21
    pendence Real Estate Investors                 9:00am Sub-Group: Weekly Wednesdays
Sunday, March 11                                Saturday, March 24
   9:00am Sub-Group: Lees Summit Real Es-         4:00pm SubGroup: Blue Springs / Inde-
    tate Investors                                  pendence Real Estate Investors
Monday, March 12                                Sunday, March 25
   5:00pm Deadline to Reserve Vendor Table        9:00am Sub-Group: Lees Summit Real
    for Tuesday’s Meeting                           Estate Investors
Tuesday, March 13                               Wednesday, March 28
Monthly Meeting Career Education Systems,          9:00am Sub-Group: Weekly Wednesdays
Ward Pkwy Shopping Center
                                                Saturday, March 31
   5:30pm Pre-Meeting—How to post properties
    on the MAREI Website                           4:00pm SubGroup: Blue Springs / Inde-
                                                    pendence Real Estate Investors
   6:00pm Monthly Vendor Hall / Networking
                                                Sunday, April 1
   6:30pm New Member Orientation
                                                   9:00am Sub-Group: Lees Summit Real
   7:00pm Speed Networking                         Estate Investors


Page 22                                                                     MAREInet.com
Sell Vacant Houses Faster                                  “Flexible rehab options
         and for more money!                                     and purchase financing
 How? We transform vacant houses - often
                                                                 for qualified investors!
 seen by buyers as stale, lifeless, unappealing -                      Ann Wilkinson
 into fully-furnished, inviting, valued Show-                          Vice President
 homes. Now in our third decade of service to                     Mortgage Loan Production
 Homeowners and their Realtors, we've become                          12501 Antioch Rd
 America's premier home staging service coast-                    Overland Park, KS 66213
 to-coast.                                                              Ph: (913) 402-1500
                                                                    Fax: (913) 402-0673
 Our professional home staging services can add
                                                                  AnnW@ArgentineFed.com
 thousands of dollars to your sale price -- and at the
 same time reduce the stress and expense of mar-                   www.ArgentineFed.com
 keting your property.


            ShowHomesKC.com
                     Amanda Palomba
                      913-227-4364




 Wireless Security Systems
         Keypad, 3 doors, 1 motion,
          1 primary & 1 door siren

      One time Charge of $99 plus tax
            Includes installation
        Requires 36 month contract.
       Monthly Monitoring Fee $39.99
                                                         Management Solutions
                  Sell house
            transfer to new owner                         to help your properties
            or move to new house
                                                            Operate Smoothly
             DevconSecurity.com                            Increase Desirability
       Marian Collins: 913-907-4942                      Enhance Investment Value
                                                         Attract & Retain Tenants
                                                             Find us Online
                                                         www.AbraxasMgmt.com
                                                             816-474-8800



Investment News                                                                     Page 21
PROPERTIES
          Eagle Bay Missouri $99,000            Package: house, cot- Danny Hammond
                                                tage, bus, boat
                                                                     www.EagleBayLO.com


          10812 Newton       $43,000   4 bdrm   Turn Key South KC 4 Christoph Becker
                                                bdrm Sect 8, Net ROI
          Kansas City, Mo                                            816-419-1165
                                                23%

          3212 Victor St     $49,500   4 bdrm   Amazing Turn Key    Christoph Becker
                                                Completely Rehabbed
          Kansas City, MO              2.5 ba                       816-419-1165
                                                Net ROI 24%

          2912 Lockridge     $30,000   6 plex   Historic District      Candace Vanice

          Kansas City, MO                       May be eligible for
                                                Historic Tax Credits

          3435 Holmes        $50,000                                   Candace Vanice

          Kansas City, MO



          3312 Holmes        $50,000                                   Candace Vanice

          Kansas City, MO


          3414 Charlotte     $50,000            $15K in TIF Funds      Candace Vanice

          Kansas City, MO


          1010 E 33rd St     $50,000            $15K in TIF Funds      Candace Vanice

          Kansas City, MO


          703 E 34th St      $75,000            Renovated              Candace Vanice




          1019 S Brookside   $54,900   3 bdrm   $2,000 buyer agent     Kevin Jamieson
          Avenue (1/2)                          bonus, Updated
                                       1 ba                            Reece & Nichols
          Independence, MO
                                                                       913-384-8331



Page 24                                                                 MAREInet.com
No address provided   $9,000        3 bdrm   Easy Rehab, Dis-             Virtue Investments
                                                        counted. Could be a
                                               1 ba                                  Makeba Hart
                                                        great rental


           North Jackson Av      $49,999       3 bdrm   Turn Key Beauty              Virtue Investments

           Kansas City, MO                     2 ba                                  Makeba Hart



           5173 Palmer           $12,500       3 bdrm   Fixer Upper                  Bilal Hazziez

           Kansas City, Mo                     1 ba     Raytown Schools              816-237-8696

                                                        Video

           7508 High Grove Rd, $57,500 mls              Large Ranch                  Joe Clark
           Grandview, MO
                                                        2 car gar, bsmt              Reece & Nichols



           8300 E 104th Tr       $38,700 mls            Large bdrms, eat in          Jamieson Home Team—
                                                        kitchen, minor TLC           Reece & Nichols. 913-
           Kansas City, MO
                                                                                     384-8331


           12### E Blue Ridge $55,000          3 bdrm   Great Cash Flow              Virtue Investments
           Blvd
                                               1ba                                   Makeba Hart
           Kansas City, MO


           3509 E 30th St        $14,000       3 bdrm   Move in Ready 3 Bedroom      BluePrintPropertySolu-
                                                                                     tions.com Christoph
           Kansas City, Mo                     1 ba
                                                                                     Becker 816-419-1165



           5637 Highland         $24,500       4 bdrm   Move In Ready! 25% ROI!      BluePrintPropertySolu-
                                                        This home is 99% Move In     tions.com Christoph
           Kansas City, Mo                     1.5 ba   Ready and will be cash-
                                                        flowing in no time at all.   Becker 816-419-1165



           5038 Bellefontaine    $9,500        2 bdrm   Fixer Upper should rent      BluePrintPropertySolu-
                                                        $600, Repairs: tlc, plumb-   tions.com Christoph
           Kansas City, MO                     1 ba     ing, furnace
                                                                                     Becker 816-419-1165


           3703 E 68th St        $7,500        2 bdrm   With a little TLC, this home BluePrintPropertySolu-
                                                        would make a great cash      tions.com Christoph
           Kansas City, Mo                     1 ba     flowing investment prop-
                                                        erty                         Becker 816-419-1165



       See More Properties MAREInet.com/Properties


Investment News                                                                                      Page 23
Using the Website
                                        Some Tips
      Property Pages: MAREI members                  people to look.
      can log in and post their investment         Photos, be sure to load up at least
      properties to the site. For the search        1 photo of the front and make that
      features to work, the more items you          photo your featured images. For
      share about the property the better.
                                                    multiple photos, it is suggested to
      We do request that these be your prop-        embed an online photo album or
      erties that you own, have a controlling       video.
      interest through a contract, or a listing    Contact Information: be sure your
      agreement as a Realtor.                       member profile is up to date and
      Best Practices                                that you make sure to include your
                                                    website link, company name, your
       One property per posting.
                                                    name and a phone number. People
       Packages - list each property indi-         can’t contact you about your prop-
        vidually and note in the text that          erty if you don’t tell them how.
        property is available as a package
                                                   Take a look at the properties on the
        and the address of the other prop-
                                                    previous pages. Note that proper-
        erty.
                                                    ties with very little info did not in-
       Details - fill out as much property         clude on their listing.
        information as possible in the fill in
        the boxes section including complete
        address, bedroom, bathroom and            To find out more about how to use
        price.                                    these portions of the website, please
                                                  visit:
       Tag Line - this appears on sum-
        mary pages, so be sure to have your       www.MAREInet.com/Help-Page
        key points about the house here.          We will be meeting at the March meet-
        We would suggest that your title be       ing at 5:30 to show you how to post a
        the address and that your tag line        property.
        be your catch phrase info to get


Page 26                                                                  MAREInet.com
MAREI News: Networking, Education and Community for Real Estate Investors
MAREI News: Networking, Education and Community for Real Estate Investors

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MAREI News: Networking, Education and Community for Real Estate Investors

  • 1. MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORS Investment News NETWORKING : EDUCATION : COMMUNITY Read Online www.MAREInet.com/Newsletter March 2012 SELLER FINANCING Non-Performing Notes SHORT SALES MARKETING SHORT SALES Disclosing Intent Right Message
  • 2. BUSINESS MEMBERS ADDRESSING THE NEEDS OF THE REAL ESTATE INVESTOR Type Company Web Phone Contact Insurance APIA REOIns.com 877-752-2742 Lisa Goodner Lender Argentine Federal Savings ArgentineFed.com 913-402-1500 Ann Wilkinson Partnering kcmoHomeBuyer kcmoHomeBuyer.com 816-523-4400 Don Tucker Prop Mgr Abraxas Prop Mgmt AbraxasMgmt.com 816-474-8800 Meka Cayce Prop Mgr Jamieson Home Team JamiesonHomeTeam.com 816-503-4671 Kevin Jamieson Prop Mgr Premier Leasing MyPremierLeasing.com 816-841-9500 Jeff Woods Realtor Realty Resource RealtyResourceKC.com 816-523-4400 Kim Tucker Security Devcon Security DevconSecurity.com 913-907-4942 Marian Collins Staging ShowHomesKC ShowHomesKC.com 770-853-3506 Amanda Palomba Supplier Canyon Stone Canyon-Stone.com 913-254-9301 Matt Puckett Title Accurate Title Company AccurateTitleco.com 913-338-0100 Jackie White Real Estate Investors and Landlords depend on a well rounded team of professionals. If you are building your team or looking to make a trade, start your recruiting with our Vendor Members and Business Associates. See a complete list of suppliers and any discounts they may of- fer to MAREI members by visiting, www.MAREInet.com. www.MAREInet.com/Services Page 2 MAREInet.com
  • 3. Contents MAREI News In This Issue Business Members 2 Contents 3 Fine Print 4 Staff 5 Directors Notes—Non-Performing Notes 6 Disclose Intent on Short Sale Flips 8 Member Benefits at a Glance 10 Seller Financing to the Rescue 12 Alternative Financing Workshop—March 17 15 Welcome New & Returning Members 17 Marketing: You Get What you Ask For 18 Calendar of Events—SubGroups 22 Investment Properties 24 Tips for the New Website: Posting Property 26 Join Now 28 March Meeting Jump Start Your Investing! Pre Meeting in March Get started on the right foot with Short We have a search engine friendly property marketing Sale Real Estate Investing. Presented by tool on the new website. Fairly user friendly too, but veteran MAREI members Donna Wilson and Laura Bullock. you might need some tips to get you started in the right direction. Come early on the 13th for our 5:30 Pre- Tuesday March 13th., from 6 to 9 Meeting to find out how to most effectively post your - New Member Orientation at 6:30 properties for investor buyers on our site. - Speed Networking at 7:15 Investment News Page 3
  • 4. MAREI Notes 2011 Contact Information National REIA PO Box 8685, Prairie Village KS, 66208 Awards of Phone: 913-815-0111 Excellence 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 Honors matters concerning real estate and other investments. Content Disclaimer Of Merit 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. Electronic Advertise in the Investment News Rate Schedule Communication Size Full Page Non-Member $175 Member $140 Business Associate $115 & 1/2 Page 1/4 Page $145 $75 $105 $65 $85 $50 1/8 Page $55 $35 $25 Membership 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 Development each month. All ads must be prepaid. Contact to verify ad format can be accepted. PDF preferred. There is an additional charge of $25 to typeset a business card ad or 1/4 page ad layout, $60 for a 1/2 page or full page lay-out. Opportunities also exist for advertising on www.MAREInet.com. Call 913-815-0111 for more information. Email ad copy to info@MAREInet.com. Mail payment to MAREI, PO Box 8685, Prairie Vil- lage, KS 66208 or request an online payment for to use credit or debit card. Page 4 MAREInet.com
  • 5. MAREI Kim Tucker 816-523-4400 Director Kim@MAREInet.com Staff Scott Tucker Don Tucker 816-523-4400 John Welchert Meeting Ambassador President Meeting Ambassador STucker319@gmail.com Don@MAREInet.com 816-522-0002 Steve Burns Dan Goodwin 913-642-5218 Shelda Goodwin Audio Visual Meeting Ambassador Meeting Ambassador cashflowtreasures@gmail.com DanGoodwin@kw.com SheldaGoodwin@kw.com L. Scott Ficinus, SFR, WHS Debra Felderhoff Michelle Winberry Meeting Ambassador BS, LS, Indep Subgroup Weekly Wednesdays Scott@Ficinus.com Investment News Page 5
  • 6. Director’s Notes Back in early January the phone rang and on the months sell it for a profit as a performing asset. other end was Jeff Merrick . Jeff works for several In the next scenario, the borrower says “We companies that sell bulk packages on notes. It have been trying to work a short sale, but the turns out that he knows Eddie Speed, our guest bank would not work with us. If we could pay trainer for March on note buying , and even sells just $10,000 less than what we owe, we could quite a few notes through Eddie’s Company sell it.” So if they owe $100,000 and you just Colonial Funding. bought the note for $75,000, you just made an Anyway, Jeff and I had a lengthy conversation easy $15,000. about the buying of Non-Performing notes. You His last scenario is the borrower says “We have see when a home owner does not make their been trying to deed the house back to the mortgage payments and it is still on the banks lender, but they would not work with us, can we books, it is usually classified as a non-performing deed the house to you?” That gives you a note. And Jeff said we can make some awesome house almost immediately with out the hassles deals with non-performing notes, if you know what of foreclosure that you can now resell or rent. you are doing. Many of the issues right now stem from the He had three typical scenarios for this type of mega banks being unwilling or unable to negoti- note. All include buying the note for a discounted ate to with the borrower. Because you would be price due to the fact that the borrower is not pay- a small lender dealing with one or two loans that ing, the more notes you buy, the larger the dis- you purchased for a large discount, you are in a count it seems.. position to work with them and resolve their is- His first scenario is that you buy the note at the sues and creating a win-win situation for all in- steep discount. Then call the borrower up to ask volved. Before you start tackling buying notes, why they are behind and they say something to especially non-performing notes, be sure you the effect of “With the increase in real estate know what you are doing. taxes, insurance cost and interest rate adjusting This concept has intrigued me for several years. the payments are just too high. If we could elimi- So please join me at the Note Seminar on the nate all of our late payments and start fresh, with 17th. We are going to be taking a ton of notes! a lower interest rate and amortize it for another 30 years we could make payments easily. But the Kim Tucker bank would not work with us.” Because you are now the bank, and bought the loan for pennies on the dollar, you are in a position to work with them Director and make this a performing loan and in a few Page 6 MAREInet.com
  • 7. accurate Accurate Closings: On Demand Training Smooth, Timely, Professional. 30 Minute Segments Title Services Provided for: Top Investor Trainers  FSBO, Wholesale, & REO Transactions  New Construction Closings From the Comfort of  Commercial Purchases and Refinance Your own Internet Connection  All Types of Loan Closings  1031 Exchanges $39.00 Training Courses  FHA, VA, USDA, Conventional Loans, and Hard Money Loan Closings REO & Lease Option  Refinance & Reverse Mortgages Creative Financing  Doc Prep, Prelim HUDS, Curing Issues Automated Investments Auctions & Foreclosures  Short Sale Closing & Assistance Short Sales  100 Years of Combined Service! Government Grant Money www.AccurateTitleCo.com 913-338-0100 phone www.MAREIU.com Asset Protection Insurance Agency www.REOIns.com 877-752-2742 Property Management Rental Services Kansas City Metro www.JamiesonHomeTeam.com Real Estate Owned / Forced Placement Kevin Jamieson For Investors & Finance Institutions 816-503-4671 Investment News Page 7
  • 8. Should You Disclose Intent On Short Sale Flips Short sale flips – the process of shorting a property In essence, this is no different than a regular then reselling it for a cash profit in a simultaneous wholesale flip except instead of paying off seller’s closing – has been taking heat lately from title com- lender in full, investor pays off seller’s lender at a panies and real estate brokers. Realtor blogs are discount. filled with drivel about how these transactions are The Hoopla illegal or unethical. What’s the real truth? Some Realtors and title companies think there The Basic Process should be full disclosure to the lender and seller The process of the short sale flip works as follows. about the resale of the property, otherwise the bank and seller are being “defrauded”. In order to Step 1: Investor signs a contract to buy a house be defrauded, someone must be owed a legal from a seller who is behind in payments. duty of disclosure. Step 2: Investor contacts seller’s lender to negotiate short sale As far as disclosure to the seller, I see no issue Step 3: Investor gets lender to approve short sale because the seller is not getting any money out of Step 4: Investor lines up backend buyer the deal either way. His lender will not agree to a short sale while the seller walks away with money. Step 5: Investor closes with seller, paying off lender, So any profit made by the investor is fair game. then resells to backend buyer in simultaneous clos- ing for a profit. As far as disclosing to the lender that you plan on reselling the property for a profit, of course you Don’t miss this event! Monthly Meeting March Monthly Meeting: Agenda More info and Registration  Thursday March 13th, 2012,  5:00 Set Up http://www.MAREInet.com/March 6pm to 9pm  5:30 pre-meeting  Career Education Systems,  6:00 check in  FREE for members, Guests  6:00 vendor hall $25 at the door, $15 if you pre- register  6:30 new member orientation  Getting Started as an Investor,  7:00 mini speed networking focus on Short Sales  7:15 Donna Wilson/ Laura Bullock Page 8 MAREInet.com
  • 9. are going to do that. That’s what “Consumer Protection”. Exactly that the package is 100 pages long investors do – they make a profit. which bank is the consumer?? and the bank’s loss mitigator is probably not going to read the con- If you planned on keeping the Disclosure tract in detail, but who’s fault is property as a killer rental instead Chances are this will end up in that?). of flipping it, there would be no is- court someday and a jury will have sue. If you fixed the property up Should you further disclose in your to be convinced that failing to tell and sold it 3 months later, there cover letter to the lender that you people you are reselling your prop- would be no issue. have a buyer lined up to resell the erty for a profit is somehow a fraud property to at a higher price? For some reason everyone gets upon the lender or the seller. No- upset because you are flipping it body wants to be the test case, so Maybe. Maybe not. an hour later for a profit. I think that to be on the safe side, Article written by Attorney William In other words, what exactly trig- your contract with the seller should gers a duty to disclose to the clearly disclose that you intend to lender that you intend to make a resell the property for a profit. profit? Well, in at least one state “Buyer may resell the property in a (Colorado), the law now requires simultaneous closing for a higher you to disclose if the resale is in- price and make a profit.” tended within 14 days. This re- This covers the seller, but what quires an all-cash closing on the about the lender? Well, the lender front end with no back-end con- gets a copy of the contract in the tract signed until day 14, risking short sale package the investor the loss of your back-end Bronchick, Investor and Founder submits to the lender. This puts buyer. Geniuses at the Colorado of the Colorado Association of the bank on notice (We all know Legislature passed this law under Real Estate Investors. First 100 Attendees To March Meeting Receives a FREE Copy of the April 2012 Issue PERSONAL REAL ESTATE INVESTOR MAGAZINE Subscribe http://www.MAREInet.com/PREI Investment News Page 9
  • 10. MAREI’S MEMBER BENEFITS PROGRAM YOUR MEMBER BENEFITS AT-A-GLANCE USE THIS PAGE AS A GUIDE TO VALUE ADDED DISCOUNTS TOOLS AND SAVINGS CREATED JUST FOR YOU ON GOODS AND SERVICES YOU USE EVERY DAY. Landlord Services Suppliers Marketing Affordable Landlord Websites with a Screening for tenants & workers with 15% discount or free trial for members. 20% discount for members. Learn how to save money at Home De- pot and register for a 2% Rebate for all purchases & rentals across the US. Websites for investors, landlords, and Electronic collection for bounced other services. FREE trial. rent checks. No charge to you. FORMS & DOCS All members receive a discount card Service Provider Member Library is packed with forms to access our exclusive discounts up and docs, plus 15 % discount at EZ to 40% off all paint, supplies, and Landlord Forms for premium forms. flooring—nationwide. Discount card for all members providing a 10% discount on all services. Market your rentals on the nations top ranked rental site. Member discount Members have access to many great is 20% off Regular Prices. tools and savings including discounts News & Information of up to 7% - nationwide. E-Update Office Solutions Our weekly email update with what’s happening in real estate including properties for sale, government af- Discounts of products through Sears fairs and local market data. Save on select FedEx Office copy and Commercial plus 5% off Gift Cards. print services up to 20% and on Investment News FedEx Shipping up to 22%. The newsletter for Mid-America Asso- Membership ciation of Real Estate Investors: pub- lished monthly and distributed both in print at our meetings and digitally to our Receive discounts up to 65% on over database of over 5000 people. 12,000 products you use the most online and in store. FREE membership in Community Buy- ing Group for all MAREI members to Continued . . . . bring you even more great discounts. Page 10 MAREInet.com
  • 11. Member Service We have several services as part of our website to help you grow Magazine for the real estate investor. your business. With discount subscriptions for MAREI members. MAREI’s Government Affairs ac- Other Discounts tively monitors national legisla- tion and rule-making that im- pacts the real estate industry and harnessing the strength of MAREI members at the grassroots level. Calendar of Events to stay up to date with all of our activities. MAREI mem- bers also re- ceive timely Calls to Action Nearly 70% of QuickBooks users say when there is a that it makes their business more prof- time for our itable. Get your Accounting on track. members to Buy at a 40% discount through Na- take action on an important vote. tional REIA. Browse the member properties to Members also find your next deal. Take the REAL ESTATE BOOKS have access time to post your investment op- to the latest The nation’s largest provider of portunities for other members in Market real estate training materi- and site visitors to browse. Data. als, DEARBORN is America’s Premier Real Estate Pub- lisher. Members receive up to 40% off. VISIT The Member Library is packed and ever growing with pdf ver- ww.MAREInet.com sions of entire books, EBooks, Special member discounts for Look under Resources - Articles, Forms, and Documents. members at Avis, Budget, and Enterprise Rentals. Discounts Investment News Page 11
  • 12. Seller Financing To the Rescue How Investors Can Profit from the Emerg- more quickly and at higher prices. That’s be- ing Solution to the Real Estate Crisis cause it offers a much larger pool of potential buyers. As a real estate investor, you know all too well that the mortgage industry is suffering from a With safe seller financing, you underwrite major meltdown. Too many institutions have loans before they are made, and then manage been lending money in a blind, reckless way. them thereafter. You must learn how to iden- Lending institutions are folding, foreclosures tify and qualify capable buyers who are ex- are reaching record highs, and subprime lend- cluded from traditional mortgages as a result ing has caused a catastrophe for property sell- of today’s tightened underwriting standards ers, buyers, and lenders alike. and the diminishing number of conventional lending institutions. As a result of today’s credit crunch, there’s a limited pool of qualified buyers and a shrinking Seller financing is fast emerging as the solu- supply of conventional lending sources. In addi- tion to the collapse of many lending institu- tion, there’s a growing number of would-be tions, and the shrinking supply of financing buyers who can no longer obtain conventional available from those that survive. For you, the loans—and an abundance of properties on the real estate investor, it could very well be the market at low prices. key to your survival in this business. Seller financing is coming to the rescue. It’s Seller Financing Goes Mainstream filling the void created by the mortgage crisis, After the high-interest rates of the 1980s, offering an alternative to those hard-to-come- seller financing became a specialty niche by conventional loans. But seller financing can among real estate transactions. The upheaval do more for the real estate investor than just in the housing market, however, is now creat- move property. For one, it can sell property ing an extraordinary demand once again for this alternative funding source. Consider this: two years ago, seller financing accounted for about 1 in every 400 real estate transactions. Today, it accounts for 1 in every 50 transactions. What’s more, some real es- tate experts predict that seller financing will soon become the financing vehicle for one out of every ten real estate transactions. Not since the 1980s, have I seen the extraor- dinary increase in, and necessity for, seller financing. What does this mean to you? Seller financing provides you the opportunity to sell your prop- erties to quality buyers, at the full retail prop- erty values and more quickly, for a substantial and steady income stream. The smart real es- Page 12 MAREInet.com
  • 13. tate investor will become adept falls that brought down many the place and fled? With fal- at using this method. Indeed, lending institutions, however, the ling prices in the housing mar- your level of success will likely investor must weigh the risk of ket, even the equity might be depend on how well you use each loan and proceed only with reduced. The seller/lender seller financing. those that present a high likeli- gets stuck with unpaid bills hood of success. That means be- For Quality, Qualify and costly repairs. The honey- ing meticulous about qualifying Qualifying for a conventional the buyers and lending only to moon is over. mortgage today is much more those of the highest caliber. Like fiancés, borrowers are difficult than it was just a few emotionally involved with the From This Day Forward . . . years ago. As a result, there are transaction and might not many more quality candidates for Most people enter into seller fi- seller financing than there were nancing contracts with the same view their situation objec- in the past. These are people enthusiasm with which they enter tively. Even well-meaning who’ve been rejected by conven- into marriage. They’re as happy buyers might believe they can tional lending institutions, in at closing as newlyweds at the afford to commit to a long- part, because less money is altar. Everybody’s eating the term loan without realizing all available. More restrictive under- cake and tossing the rice. But if the responsibilities and ex- writing criteria are in effect, the commitment is based solely penses they will incur, nor which disqualify countless candi- on blind faith, the relationship their ability to meet those ob- dates who have both a willing- may dissolve faster than ice in ligations. Equally excited ness and the ability to meet the the punchbowl. about closing the deal, the requirements of the loans. In ad- No investor finances his property seller might be blind to the dition, many other would-be buy- for a buyer with the belief that potential risks in doing busi- ers have had hardships that the arrangement will turn sour. ness with a particular buyer. they’ve since overcome. At most, it’s considered a remote Together, these factors contrib- possibility with tolerable conse- Other investors recognize the ute to a startling fact: As many quences. If the buyer defaults on risks but believe they can as 50% of the people who the loan, the investor assumes sidestep a foreclosure action would have qualified for a that he can simply annul the by having the buyer pre-sign conventional mortgage just deal, repossess the property, and a deed back to them at clos- two years ago no longer do. avoid any loss. ing. That would be an invalid True, there had been much reck- But this assumption is flawed. deed because the buyer can- less lending to risky borrowers in The buyer has occupied the prop- not waive his future rights. recent years. But since the erty for months, perhaps years. But there is no protection for shakeout in the lending industry, What condition is it in now? Have the seller in case the arrange- many good candidates are now the taxes been paid? Are the in- ment goes sour. Seller financ- being denied the opportunity to surance premiums up to date? borrow money. ing doesn’t come with a pre-nup. Has the buyer kept up with the Seller financing is the ideal solu- routine maintenance and repairs? Clearly, the smart approach is to tion for these people and inves- Or, as in the case of some fore- learn all you can before you’re tors alike. To avoid the same pit- closures, has the buyer trashed (Continued on page 14) Investment News Page 13
  • 14. (Continued from page 13) with dating; it’s smart with lending. Likewise, real estate sellers should evaluate their seller-finance candidates with this same level of heavily invested in the relationship. scrutiny. Yet too often, they fail to conduct due A Safe Bet diligence. This careless approach results in count- less defaults and creates the impression that How risky is seller financing? Much lower than it used seller financing is riskier than it should be. to be. In the past, would-be borrowers paying on seller-finance mortgages were, as a group, much The savvy investor will ensure good underwriting, riskier than they are today. That’s because it was not only to achieve a smooth and successful easy, too easy, to obtain a conventional loan. People transaction but also to maximize the cash value of who failed to qualify for traditional mortgages were, the note. Most note holders don’t realize that the by definition, the riskiest borrowers. number one variable that affects the cash value of their note is the buyer’s credit. So not only does Lending institutions have since tightened their crite- disciplined underwriting mean a more trouble-free ria, making it far more difficult for would-be buyers to loan, you also create a more salable loan in the borrow money. As a result, more people are now pur- future, and one that’s worth more. chasing property with seller financing. Squeezed out of conventional lending, formerly qualified applicants To help ensure a profitable relationship with your are increasing in number and anxious to buy prop- borrower, then, you must perform due diligence. erty. This raises the quality of the typical seller- The independent investigation will assess the ac- finance candidate. curacy of your buyer’s statements regarding as- sets, income, employment, debt, and so forth. Many are “just missed” borrowers who now fall nar- Due diligence allows you to make sound decisions rowly outside the newly tightened criteria of lending based on solid facts, not subjective impressions. institutions. These are reliable, low-risk prospects It allows you to distinguish the quality borrower who show every intention of meeting the terms of from the risky one. And you can then create a their loans, and they have the ability to do so. They more valuable loan. would have easily qualified for conventional mort- gages in the past but no longer “measure up” on pa- Ronald Reagan said it best with his signature per. phrase, “Trust but verify.” What the savvy investor must do is differentiate be- You Can Bank on It! tween those deserving buyers and the obviously risky Using another analogy, imagine that you’re con- ones. Your success will depend on the thoroughness sidering buying stock in a bank. Despite the by which you investigate each prospect and then use bank’s history of solid performance, let’s say it sound judgment when deciding whether to offer seller now decides to relax its due diligence procedures. financing. This saves both the time and expense of verifying I Do Diligence the loan applicants’ statements and examining other sources of pertinent information. With less Returning to our marriage analogy, approving your stringent requirements, the bank is now able to seller-finance candidate is a lot like choosing your life qualify more borrowers and process more loans. partner. Risky loans. Now here’s the question: Would you Few people enter marriage without having first gath- want to own stock in that bank? ered considerable information about their mate. It Unfortunately, many property owners enter into starts with that first encounter, when your date pre- seller-finance contracts with that same, careless sents himself or herself in the best possible light. He approach. They don’t pull a credit report, verify appears honest; she seems responsible. As you get to income statements, examine the employment his- know each other, you like what you see and you want tory, or investigate the buyer’s liabilities. It’s like this to work. You make plans. eloping on that first date. Smart couples approach the altar having already dis- When you seller finance, you’re buying stock in covered and judged their fiancés’ background, char- your own bank. Make sure you can bank on your acter, values, strengths, and weaknesses. They con- decisions. duct their own due diligence before their “I do’s.” Many singles even hire a private investigator to do an You can be extremely successful in this business, independent background check on their potential if you use a methodical approach that calculates mate before proceeding with the romance. It’s smart (Continued on page 16) Page 14 MAREInet.com
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  • 16. (Continued from page 14) is find them. the property (your basis), the less risk you can afford to take. The Basis Basics the risk and weighs the benefit. Let’s say you’ve invested (Trust me, I know.) In addition, During my 28 years in seller fi- $75,000 in that $100,000 prop- it’s much more profitable than nancing, the question I’m most erty. You’re now at a greater risk sitting on an unsold property. But frequently asked by property of losing more, if delinquency seller financing does require that sellers is this: At what point and default occur. you understand some fundamen- should you make a very aggres- With a low basis you can lower tal principles—and that leads us sive underwriting decision? your underwriting standards. I’ve to our next analogy. The answer depends entirely on known and even consulted with Playing Your Cards Right how much you’ve invested in the real estate investors who main- asset. If it’s worth $100,000 and tained a fairly liberal underwrit- Let’s take this concept to Las Ve- you’ve invested only $25,000, ing practice. These transactions gas. You certainly wouldn’t play you have a “low basis.” With a succeeded because the investors Blackjack without first under- low basis in a property, you can had a low basis in their proper- standing the rules of the game. better tolerate a default risk. ties. With an inordinately low in- With that knowledge, for exam- vestment in the property, say 20 ple, you wouldn’t take a hit if you In a way, you’re like a pawn shop or 30%, you can tolerate the ad- have 18 and the dealer shows a owner. You’ve taken as collateral ditional risk. This strategy, how- 4. Otherwise, what stays in Ve- an item whose value is far ever, is riskier and more chal- gas is your money. greater than the money you’ve lenging. It demands greater at- loaned. If the transaction pro- Yet a lot of people who offer tention to detail, and requires ceeds as planned, your customer seller financing are gambling with more time and resources to ser- repays the loan with interest, and their own assets. That’s because vice the portfolio. But if you have you make a profit on your loan to they don’t understand the basic a low basis, you can apply lenient him. If your customer defaults, principles involved. Rather than qualifying criteria and still be you take possession of the collat- analyze the risk and then judge successful. eral. Having invested only a frac- wisely, they unwittingly close tion of its retail value, you can Seller Financing: It’s a Good deals with high-risk buyers. then sell it to someone else for a Thing Smart seller-financing is profit- healthy profit. Having purchased more than able. There are plenty of aces in That’s why the higher the per- 30,000 seller-financed notes, I’ve the huge and growing pool of po- centage of your investment in seen a pattern of success and tential buyers. All you need to do failures. These aren’t just theo- retical concepts. They’re the re- sult of actual experiences involv- Get Your Own Free Copy ing a range of variables. With due diligence, good judgment, Find out how you can profit. and some common sense, you can become very successful Download your with seller financing. And the MAKING MONEY FROM timing couldn’t be better. Free Ebook Today! THE MELTDOWN Today there are plenty of quality How to Profit from the Nation’s Growing Real Estate Crisis people who deserve the opportu- Go Online to nity to own their own homes. They can afford to buy your MAREInet.com/freeMMM property, and they will make their payments on time. In addi- tion to your own success in this Information on business, you can provide a March 17th Seminar much-needed service that will help others. Are you ready to say Go to Page 27 or online at: “I do”? MAREInet.com/EddieSpeed By Eddie Speed, Note Business Expert & MAREI’sGuest Trainer By Eddie Speed on March 17th. Page 14 MAREInet.com
  • 17. New Members Renewing  Barry Bottemuller: Leawood, KS  Albert & Josephine Abraham: Shawnee  Eric Buchman: Kansas City, Mo  Bemate Bomboma: Overland Park, KS  Terry Carter: Freeman, MO  Day Boswell: Overland Park, KS  Perry Cashion: Lees Summit, MO  Michael Bryant: Lees Summit, MO  Rene DeCrumpe: Kansas City, MO  Larry Christensen: Weatherby Lake, MO  Joey Frey: Leawood, KS  Ken Collyard: Shawnee, KS  Kymberly Griggsby: Kansas City, Mo  Laura Johnson: Kansas City, MO  Bret & Nancy Hoover: Independence, MO  Steve Lau: Overland Park, KS  Ronald Ireland: Kansas City, MO  Lisa McKay: Overland Park, KS  Lisa Rabbe: Kansas City, MO  JJ Palowski: Kansas City, MO  Dale & Phyllis Steinman: Chanute, KS  Stephen Summers: Independence, MO Investment News Page 15
  • 18. Marketing Seller-Finance You Get What You Ask For! By W. Eddie Speed sell the note, it’ll be a challenge to get a decent price for it. Eureka! That moment of mutual exhilaration has finally arrived when your prospect says to you, Many real estate professionals conclude that the “This is it!” He decides to buy your property—and prospect pond is stocked with only the riskiest of you’re eager to sell it to him. But then reality hits. candidates, since that’s the response they re- Your buyer’s application for a conventional loan ceive from their ads. In fact, the quality of poten- is rejected. The deal falls through, yet again. tial buyers seeking properties with seller financ- ing is much better than you might imagine—and This scenario is becoming all too common, caus- it’s improving. It’s the advertising that needs ing immense frustration for individual sellers, help. By simply changing the wording of their realtors, investors, and buyers alike. But as I re- advertisements, I’ve helped countless real es- ported in “Seller Financing to the Res- tate professionals find better buyers. cue!” (Invest Magazine, Oct. 2008), there’s an alternative to conventional lending that addresses The Right Pitch for the Best Catch these situations. Seller financing is filling the To get the best results, your ads should reach lending void created by the mortgage meltdown out to the best buyers. This simple strategy can and the credit crunch. boost your real estate business big time. Success with seller financing requires smart mar- Whether you’re using newspaper ads, yard keting. With the right marketing, you’ll be able to signs, websites, email blasts, flyers, direct mail, identify and target your best prospects. You’ll be billboards, Craig’s List, or any combination of able to interact with people who are not only ca- marketing tools, market wisely. Specify the kind pable of meeting their repayment obligations but of buyer you’re looking for. are most likely to do so. To use a fishing analogy: If you want to lure the To attract these low-risk buyers, I recommend an prime candidates, you need to use the right bait. advertising method that is remarkably simple yet Fish for anything that bites, and you’ll find your- powerful. It’s a technique that challenges the type self unhooking the catch and tossing it back, of ads that are commonly used for seller financ- again and again. Meanwhile, you’re wasting ing. your time and your tackle. As a real estate pro- fessional, it’s what you hook—and keep—-that The typical seller-finance advertisement targets counts. the broadest audience possible—and focuses on the least qualified candidate. The result is pre- So, how do you “fish” for the best buyers? It dictable. If you use vague, all-encompassing ads, starts with the bait. Or more accurately, the line you’ll attract buyers with lousy credit, zero assets, that you use. sporadic employment, and/or substantial debt. “Bad Credit? No Credit? No Problem!” Even if the property sells, it could take up to 20 years of monthly repayments before you’ll know Does this line sound familiar? Search it on whether you’ve made the right decision. Remem- Google® and you’ll find more than 17,000 list- ber: you don’t get paid in full at the closing of a ings. Earlier today, I even heard it on the radio. seller-financed transaction. And if you decide to This copycat copy is so overused that it satu- Page 16 MAREInet.com
  • 19. rates seller-finance marketing. ing, you should ask yourself: Is this candidates—and increasingly, bet- Perhaps you’re even using this the buyer I’m looking for? ter candidates are needing it. line, or something similar, yourself. Seller financing is also being used Good Guys, Bad Luck to create far better loans on pricier Worse, the bad-credit/no-credit Meanwhile, people with fairly de- properties. message speaks to the folks you cent financial circumstances will least want to attract. It announces, There are plenty of responsible, likely dismiss your ads. That’s be- albeit unintentionally, “No qualifica- capable people who would have cause until recently, “seller fi- tions required!” If you can fog a qualified for a typical mortgage nance” or “owner will carry” ads mirror, you can get a loan. only recently—and their numbers targeted the riskiest buyers and are increasing. These just-missed The fact is that you almost never sold the least attractive properties. applicants are being squeezed out find good-credit buyers with a bad- As it emerges as a mainstream of conventional lending because of credit ad. Before spending one financing method, however, seller changing market conditions, more more dime on this kind of advertis- financing is attracting much better restrictive qualifying criteria, a Property Management Section 8 Housing “Presentation is Everything!” KC Metro Wide Canyon-Stone.com Jeff Woods 550 E. 56 Highway, Suite B Olathe, KS, 66061 Broker www.MyPremierLeasing.com Phone: (913) 254-9300 816-849500 Fax: (913) 254-9301 info@canyon-stone.com www.Canyon-Stone.com Investment News Page 17
  • 20. (Continued from page 19) your time chasing chancy deals might have been turned down for a and getting frustrated by the out- conventional loan only because of shortage of available funds, and come. recently tightened lending prac- personal circumstances that make tices. On paper, they’re labeled Back to my fishing analogy, you’ll them look risky on paper. unqualified but just barely. These catch fewer fish with a more re- prospects feel they deserve the strictive ad, but they’ll more likely opportunity to buy the property be what you’re fishing for. You The bad-credit ad looks like the they can afford because they know won’t waste your time and re- seller is seeking desperate buyers. they’re honest and trustworthy. sources catching—and tossing Many low-risk borrowers won’t They can—and will—meet their back—unqualified buyers. You’ll even consider doing business with repayment obligations. Now, isn’t get what you advertise for. someone who caters to the poor- that your ideal buyer? est of prospects. What does that Here’s a superb example of this Why not ask for deserving buyers say about the condition of the principle. I knew a real estate in- in your ads? This comes with a property, the price the buyer will vestor who was at the top of his bonus: You’ll feel especially good have to pay, or the terms of the game. His advertisements offered about being able to serve them. loan? properties for “only $500 down.” As a result, he attracted just what The Low Down on High Down Better-qualified people don’t rec- he asked for, plenty of buyers who Payments ognize themselves as risky bor- could afford only $500 down. Over rowers, and they certainly don’t Over the years, I’ve known a hun- time, his buyers defaulted at a rate lump themselves into that category dred or more seller-finance inves- that was three times that of other of bad-credit types. They don’t see tors who buy mobile homes in buyers who paid significantly themselves as the bad guys, but rental parks. They purchase them greater down payments. And he good guys in a bad situation. for cash at rock-bottom prices, say probably missed out on some de- $2,000 to $5,000 apiece. Then They’re the retiree on a solid pen- cent buyers in the process. they spruce them up, and seller sion whose employment history If you want qualified buyers, ask finance them for substantially more ended a decade ago. They’re the for them. You’ll filter out most of than they paid for them. Appealing career soldier whose income is the high-risk candidates before to the low-credit/no-credit pros- modest but reliable. They’re the you even hear from them. You can pects, these investors attract working woman who’s advancing spare yourself and your clearly plenty of buyers. Risky buyers. in her career and making final pay- unqualified prospects much Buyers with dreadfully low credit ments on her college debt. They’re wasted time, expense, and disap- scores who put little money down. the “just missed” buyers who are pointment. Without much skin in the game, ideal candidates for seller financ- these buyers have little to lose if ing. Serving the Deserving they’re delinquent in their pay- Ask and Ye Shall Receive! To attract the most viable candi- ments or go into default. dates, there’s an even more dis- So, how do you market seller fi- This can be a successful invest- criminating approach you might nancing in a way that attracts ment strategy but only if you main- want to consider. You can appeal these prospects? It’s simple. Just tain an extremely low cost basis to low-risk prospects with the ask for them! Forget the vague and are prepared to deal with sig- word, “deserving.” and desperate, I’ll-deal-with- nificant problems. When asked, anyone ad. Instead, try something “Seller Financing for Deserving Buyers!” I’ve warned potential investors that like this: 30% of their loans could go into This can draw an even better re- “Seller Financing for Qualified Buyers!” sponse, since you describe your default. A colleague of mine tried it targeted prospect as not only a and succeeded. After several hun- “Qualified Buyers: Owner Will Carry!” dred deals, though, he told me I qualified buyer but a quality per- Tell your prospects what the son. I’ve seen excellent results was wrong. The default rate was “catch” is upfront. That way, you’ll from such ads. Here’s why: only 29%. spare the riskiest buyers the disap- If those are the odds you want to “Deserving buyers” recognize pointment of a rejection while you play, go forth and multi-buy. But themselves in these ads. More- encourage the best candidates to there’s a better method, one that over, they appreciate that you rec- call. Better still, you won’t waste has proven quite successful by a ognize they’re out there, too. They Page 20 MAREInet.com
  • 21. long-time real estate investor in off a large debt are prime candi- specific weakness. Bad Credit? No Pennsylvania. dates for these transactions. Credit? Problem! Vince Sellers also buys mobile Catering to this market requires The Bottom Line for Top Dollars homes on the cheap. But he even more attention to your adver- In your seller-finance ads, you proves that with the right ad, you tising message. Why not use an should pitch to your most promis- can find the right buyers. Vince’s upscale, feel-good ad like: ing prospects. Whether you want a ads clearly specify what he wants: “Luxury Living for Deserving qualified buyer, a deserving buyer, “Owner Financing with Large Buyer: Owner Will Carry.” a significant down payment, or Down Payment.” some other criterion, tell would-be Give Credit the Credit it De- buyers what you’re looking for. Let And that’s exactly what he gets: serves! them screen themselves out of the buyers with $8,000, $10,000, even running so that you don’t have to. $12,000 in down payments. That Now let’s look at the secondary Rather than sell them on your alone covers his cost of the prop- market. As a buyer of seller- property, position your offer so that erty and provides him with some financed notes, the question I’m they’ll want to sell themselves to immediate profit along with it. The most often asked is, “What’s the you. You’ll waste less time with the only thing Vince does differently discount on this note?” This al- decidedly unqualified, and can fo- from his peers is this: He adver- ways leads me to a critical point: cus on the quality candidates you tises for what he wants. The buyer’s credit is the number most want to do business with. Premium Properties Enter the one factor that determines the dis- If your phone rings less often, it Seller-Finance Market count. doesn’t matter. That’s because it’s In general, seller financing has not the response rate but the con- Other variables that contribute to been used for low-cost housing version rate that matters. So start the amount of the discount include and land transactions. During the asking for those quality buyers. the property itself (the collateral), 1980s, there was a notable excep- You’ll have more quality transac- down payment, structure of the tion. When interest rates on con- tions as a result. Eureka! sale and note, seasoning (how ventional loans soared past 18%, many payments have been col- Suggested Pull Quotes: owners of luxury properties turned lected), and loan documentation. to seller financing. It allowed them “The typical seller-finance adver- In all of my years of note acquisi- to establish their own interest tisement focuses on the least tion, I can usually attribute the rates, down payments, monthly qualified candidate.” note’s value to these factors. If the payments, and terms of their note has a negative in, say, the “You almost never find good-credit loans. This flexibility allowed sell- seasoning, yet the other factors buyers with a bad-credit ad.” ers to offer affordable rates and are positive, it has the potential for buyers to make their payments. “The buyer’s down payment alone a good price. When institutional lenders dropped can cover your cost of the property their interest rates to more toler- But of all of the factors that deter- and provide immediate profit.” able levels, expensive properties mine the amount of discount, the “The buyer’s credit is the number began selling through conventional buyer’s credit counts the most. In one factor that determines the dis- financing. fact, bad credit can be a deal count.” breaker. Rampant foreclosures at all levels “It’s not the response rate but the of the price spectrum are now Let’s say you have two identical conversion rate that matters.” placing even luxury homes on the scenarios, except one buyer has a market at bargain prices. With the credit score of 750 and the other’s Learn more from Eddie Speed, shortage of conventional mort- is less than 550. That alone can Founder of Note School®, at his gages, especially jumbo loans, affect the amount of the discount all Day Training in Kansas City on seller financing is making a come- by 25% or more. And that as- Saturday March 17th. back on these high-end properties. sumes there’s an offer to purchase Details & Registration on This offers tremendous profit po- the low-credit note in the first tential for the real estate profes- place. Page 27 or online at sional. The just-missed buyers This is yet another reason why you http://www.MAREInet.com/notes who have the wherewithal to pay should avoid ads that cater to this Investment News Page 19
  • 22. CALENDAR events , Locations, Cost & Registration at www.MAREInet.com/Calendar Saturday, March 3rd  7:15pm Presentation  9:00am: Tax Free Wealth—All Day Semi- Wednesday, March 14 nar with Equity Trust, Airport Marriot.  9:00am Sub-Group: Weekly Wednesdays  4:00pm SubGroup: Blue Springs / Independ- Saturday, March 17 ence Real Estate  8:30am All Day Alternative Financing Sunday, March 4th Workshop, Career Education Systems  9:00am: Sub-Group: Lees Summit Real Es-  4:00pm SubGroup: Blue Springs / Inde- tate Investors pendence Real Estate Wednesday, March 7th Sunday, March 18  9:00am Sub-Group: Weekly Wednesdays  9:00am Sub-Group: Lees Summit Real Es- Saturday, March 10 tate Investors  4:00pm SubGroup: Blue Springs / Inde- Wednesday, March 21 pendence Real Estate Investors  9:00am Sub-Group: Weekly Wednesdays Sunday, March 11 Saturday, March 24  9:00am Sub-Group: Lees Summit Real Es-  4:00pm SubGroup: Blue Springs / Inde- tate Investors pendence Real Estate Investors Monday, March 12 Sunday, March 25  5:00pm Deadline to Reserve Vendor Table  9:00am Sub-Group: Lees Summit Real for Tuesday’s Meeting Estate Investors Tuesday, March 13 Wednesday, March 28 Monthly Meeting Career Education Systems,  9:00am Sub-Group: Weekly Wednesdays Ward Pkwy Shopping Center Saturday, March 31  5:30pm Pre-Meeting—How to post properties on the MAREI Website  4:00pm SubGroup: Blue Springs / Inde- pendence Real Estate Investors  6:00pm Monthly Vendor Hall / Networking Sunday, April 1  6:30pm New Member Orientation  9:00am Sub-Group: Lees Summit Real  7:00pm Speed Networking Estate Investors Page 22 MAREInet.com
  • 23. Sell Vacant Houses Faster “Flexible rehab options and for more money! and purchase financing How? We transform vacant houses - often for qualified investors! seen by buyers as stale, lifeless, unappealing - Ann Wilkinson into fully-furnished, inviting, valued Show- Vice President homes. Now in our third decade of service to Mortgage Loan Production Homeowners and their Realtors, we've become 12501 Antioch Rd America's premier home staging service coast- Overland Park, KS 66213 to-coast. Ph: (913) 402-1500 Fax: (913) 402-0673 Our professional home staging services can add AnnW@ArgentineFed.com thousands of dollars to your sale price -- and at the same time reduce the stress and expense of mar- www.ArgentineFed.com keting your property. ShowHomesKC.com Amanda Palomba 913-227-4364 Wireless Security Systems Keypad, 3 doors, 1 motion, 1 primary & 1 door siren One time Charge of $99 plus tax Includes installation Requires 36 month contract. Monthly Monitoring Fee $39.99 Management Solutions Sell house transfer to new owner to help your properties or move to new house Operate Smoothly DevconSecurity.com Increase Desirability Marian Collins: 913-907-4942 Enhance Investment Value Attract & Retain Tenants Find us Online www.AbraxasMgmt.com 816-474-8800 Investment News Page 21
  • 24. PROPERTIES Eagle Bay Missouri $99,000 Package: house, cot- Danny Hammond tage, bus, boat www.EagleBayLO.com 10812 Newton $43,000 4 bdrm Turn Key South KC 4 Christoph Becker bdrm Sect 8, Net ROI Kansas City, Mo 816-419-1165 23% 3212 Victor St $49,500 4 bdrm Amazing Turn Key Christoph Becker Completely Rehabbed Kansas City, MO 2.5 ba 816-419-1165 Net ROI 24% 2912 Lockridge $30,000 6 plex Historic District Candace Vanice Kansas City, MO May be eligible for Historic Tax Credits 3435 Holmes $50,000 Candace Vanice Kansas City, MO 3312 Holmes $50,000 Candace Vanice Kansas City, MO 3414 Charlotte $50,000 $15K in TIF Funds Candace Vanice Kansas City, MO 1010 E 33rd St $50,000 $15K in TIF Funds Candace Vanice Kansas City, MO 703 E 34th St $75,000 Renovated Candace Vanice 1019 S Brookside $54,900 3 bdrm $2,000 buyer agent Kevin Jamieson Avenue (1/2) bonus, Updated 1 ba Reece & Nichols Independence, MO 913-384-8331 Page 24 MAREInet.com
  • 25. No address provided $9,000 3 bdrm Easy Rehab, Dis- Virtue Investments counted. Could be a 1 ba Makeba Hart great rental North Jackson Av $49,999 3 bdrm Turn Key Beauty Virtue Investments Kansas City, MO 2 ba Makeba Hart 5173 Palmer $12,500 3 bdrm Fixer Upper Bilal Hazziez Kansas City, Mo 1 ba Raytown Schools 816-237-8696 Video 7508 High Grove Rd, $57,500 mls Large Ranch Joe Clark Grandview, MO 2 car gar, bsmt Reece & Nichols 8300 E 104th Tr $38,700 mls Large bdrms, eat in Jamieson Home Team— kitchen, minor TLC Reece & Nichols. 913- Kansas City, MO 384-8331 12### E Blue Ridge $55,000 3 bdrm Great Cash Flow Virtue Investments Blvd 1ba Makeba Hart Kansas City, MO 3509 E 30th St $14,000 3 bdrm Move in Ready 3 Bedroom BluePrintPropertySolu- tions.com Christoph Kansas City, Mo 1 ba Becker 816-419-1165 5637 Highland $24,500 4 bdrm Move In Ready! 25% ROI! BluePrintPropertySolu- This home is 99% Move In tions.com Christoph Kansas City, Mo 1.5 ba Ready and will be cash- flowing in no time at all. Becker 816-419-1165 5038 Bellefontaine $9,500 2 bdrm Fixer Upper should rent BluePrintPropertySolu- $600, Repairs: tlc, plumb- tions.com Christoph Kansas City, MO 1 ba ing, furnace Becker 816-419-1165 3703 E 68th St $7,500 2 bdrm With a little TLC, this home BluePrintPropertySolu- would make a great cash tions.com Christoph Kansas City, Mo 1 ba flowing investment prop- erty Becker 816-419-1165 See More Properties MAREInet.com/Properties Investment News Page 23
  • 26. Using the Website Some Tips Property Pages: MAREI members people to look. can log in and post their investment  Photos, be sure to load up at least properties to the site. For the search 1 photo of the front and make that features to work, the more items you photo your featured images. For share about the property the better. multiple photos, it is suggested to We do request that these be your prop- embed an online photo album or erties that you own, have a controlling video. interest through a contract, or a listing  Contact Information: be sure your agreement as a Realtor. member profile is up to date and Best Practices that you make sure to include your website link, company name, your  One property per posting. name and a phone number. People  Packages - list each property indi- can’t contact you about your prop- vidually and note in the text that erty if you don’t tell them how. property is available as a package  Take a look at the properties on the and the address of the other prop- previous pages. Note that proper- erty. ties with very little info did not in-  Details - fill out as much property clude on their listing. information as possible in the fill in the boxes section including complete address, bedroom, bathroom and To find out more about how to use price. these portions of the website, please visit:  Tag Line - this appears on sum- mary pages, so be sure to have your www.MAREInet.com/Help-Page key points about the house here. We will be meeting at the March meet- We would suggest that your title be ing at 5:30 to show you how to post a the address and that your tag line property. be your catch phrase info to get Page 26 MAREInet.com