This action might not be possible to undo. Are you sure you want to continue?
MID-AMERICA ASSOCIATION OF
REAL ESTATE INVESTORS
NETWORKING : EDUCATION : COMMUNITY : GOVERNMENT March 2013
U -A O Y T A
In This Issue
Real Estate Cycles 6 8 12
What Goes Around Comes Around
Social Media Marketing
Why are you Failing?
Real Estate Contracts
Auctions 16 18 20 18
Absolute Auction in April—How they Work!
Collection Getting Your Rents THE FBI My New Client Collection Getting Your Rents Every Issue
10 14 14 24 26 23 24
Benefits at a Glance Membership Membership Investment Opportunities March Workshop: Rehab March Monthly Meetings Monthly Calendar
FREE Gift for MARCH Meeting Attendees
Check out our Website MAREInet.com Contact us by Phone 913-815-0111 Email US info@MAREInet.com Join The Conversation MAREInet.com/Blog Join Association MAREInet.com/Membership
Personal Real Estate Investor Magazine March / April 2013 Special Feature Section NoteWorthy Guide to Profitable Investing in Real Estate Notes
SERVICES THAT PUT PROS AND INVESTORS FIRST
With our FIRST for Pro initiative, The Home Depot is taking Even better care of our best customers.
FAST IN AND OUT
Time is money — we’ll get you back to work quickly. Dedicated Pro Desk Associates. Two hour advance order pulling.
In Store Hands On—How To Workshops
Want to learn How a project is completed. Check out our workshops. In store workshops each month, check out our website and your local store. Access step by step video 24-7 on our website—look for our Project Guide Library
10% Price Guarantee
If you find a lower price on identical in-stock item We will match the price & beat it by 10%. Excludes special orders & bid pricing and others—see website for complete details.
GREAT PRICES JUST FOR PROS
We Offer everyday low prices, plus more ways to save on larger orders. You can count on competitive pricing on everything in every department Volume pricing discounts available on purchases as low as $2,500. Instant bulk price savings available 1000s of items.
SPECIAL DISCOUNTS FOR MAREI
MAREI members receive special discounts at The Home Depot nationwide. Two percent rebate paid twice a year on all purchases made through all registered accounts. Twenty percent discount on selected paint brands. Exclusive to members of National REIA.
EXCLUSIVE PROJECT ESTIMATOR APP
Coming in 2013, the Home Depot Project Estimator App for iPad, a business changing tool for National REIA Chapter members nationwide. Watch your local REIA Chapter for Investment News more information.
Mid-America Association of Real Estate Investors
The only National REIA Chapter in the Tri State Region Serving KS, MO & NE Honor’s of Merritt Winner National REIA Awards of Excellence 2011 & 2012 Read Newsletter Online Anytime MAREInet.com/Newsletter Connect with us Online LinkedIn Group: Kansas City Real Estate Investors
PO Box 8685, Prairie Village KS, 66208 Phone: 913-815-0111 Email: info@MAREInet.com
Our Mission Statement
Mid-America Association of Real Estate Investors is dedicated to promoting ethical real estate investing and to protect and promote the best interest of our membership through educational and networking opportunities as well as community, legislative and public relations.
MAREI does not exist to render and does not give legal, tax, economic or investment advice and disclaims all liability for the action or inaction taken or not as a result of communications from or to its members, officers, directors, employees and contractors. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment and related matters concerning real estate and other investments.
Facebook Page: Kansas City Real Estate Investing
Facebook.com/Groups Kansas City Real Estate: /kcrei/ Mid-Missouri Real Estate: /MidMo/ Omaha Real Estate: /OmahaRE/ Topeka Real Estate: /TopekaRE/ Wichita Real Estate: /WichitaRE/ Special Groups Facebook KCMO Water Dept Issues: /badbilling/ MO Creative Finance Legislation Find us on Twitter @MAREInet Tweet #KCREI
The views and opinions expressed by authors of articles contributed to this newsletter do not necessarily reflect those of the association, the board of directors or the staff.
Advertise in the Investment News
Rate Schedule Size Full Page 1/2 Page 1/4 Page 1/8 Page Non-Member $175 $145 $75 $55 Member $140 $105 $65 $35 Business Associate $115 $85 $50 $25
A 10% discount is given on ads pre-paid for 6-12 months. Any changes to a pre-paid ad will incur a minimum charge of $20. The deadline to submit ad copy is the 1st of each month. All ads must be prepaid. Contact to verify ad format can be accepted. PDF preferred. There is an additional charge of $25 to typeset a business card ad or 1/4 page ad layout, $60 for a 1/2 page or full page lay-out. Opportunities also exist for advertising on www.MAREInet.com. Call 913-815-0111 for more information. Email ad copy to info@MAREInet.com. Mail payment to MAREI, PO Box 8685, Prairie Village, KS 66208 or request an online payment for to use credit or debit card.
LET US HELP KEEP PROPERTIES MARKETABLE
Keep Costs Under Control & Meet Tight Deadlines Dedicated to your Success, With Solutions for Every Surface & All the Essentials
National Account Services
Our strategic account teams can simplify processes and maximize efficiencies with centralized account management.
LEED® & VOC Coatings
Download the latest guide on our products that meet LEED® and low VOC specs.
Find out about our color design services for properties and read about the latest color trends.
Flooring Products & Installation
Wide variety of name brands, 24-hour turnaround and reliable installation.
Sherwin-Williams is your one-stop source for commercial wall covering. Over 5,000 residential and commercial wallpaper collections available.
Commercial Floor Coverings
From carpeting to sheet vinyl, select the right floorcovering specific to your needs. Fully stocked national network, fast turnaround and reliable service.
Enhance curb appeal and make selection easier with preselected exterior color schemes.
Finishing Touch™ Builder Support Program
Comprehensive Program for your Home Buyers: Welcome Kits, Discount Cards, and Model Home Programs.
EXCLUSIVE MEMBER DISCOUNT
MAREI as a member of National REIA is able to bring our members the exclusive Sherwin William Discount Card that offers unbeatable savings on paint, applicators, floorcovering, paint sundries, wall covering, spray equipment, and even window treatments! Members look for your discount card in your members Benefit Package or download from the Member’s Discount Section of the MAREI Member Library.
ASK SHERWIN WILLIAMS Find out more about all these products and services offered by Sherwin Williams plus their Chip It Online Color Matcher, ColorSnap Studio for iPad and their Paint Pro Alerts by Text at
In getting ready for the Rehab Workshop I am going to be teaching on the 16th, I pulled out my outline from the last few times I taught the class and I have found that over the years, the workshop has changed to the point that I think we are almost back to the original version in some cases and still finding a new perspective on others. Finding Deals On the first time around as well as for most of the other times the workshop has been taught we focused on finding bank owned REO properties. This was easy as you could have a Realtor pull up a list, go look at them and buy them in a fairly short time. The competition for Bank Owned homes, the really good ones has always been fairly aggressive and I have been known to bid more than list price in an effort to acquire a property. But today, we see banks foreclosing less and homeowners as well as investors fighting for the properties, making the REO route very tough. Todays, investor has to work a bit harder to find the best deals from the REO agents, as well as the local wholesale investor, and even their own marketing campaigns to get the sellers calling them. Funding the Deals When we started with this workshop, there were not a lot of avenues to fund a purchase and rehab. Most people either had an abundance of cash, had a home equity line of credit or might have found some local bank willing to fund the purchase and rehab. Fast forward to 2006 and 2007, we talked a lot about Private Funding and Hard Money or Rehab Lenders who would fund purchase and rehab up to 65 to 70% of the rehab. In the slow years of 2010 to 2012, the banks just stopped lending and most hard money / rehab lenders stopped lending. Banks closed out lines of credit and we were left with only our own cash or private lenders. As I brush off my notes, I can tell you that the local banks are coming back with rehab funding as well as the Hard Money Lenders. There are more people at the REIA meetings letting you know they have funds to be your private lender and even a few banks are back in the mix of offering funding for purchase and rehab.
Rehab The items that need to be fixed on the houses has been fairly consistent over the years. We have seen that prices on a some of the high end items has came down, allowing us to put granite counters in much more often, and our colors might be a bit different. However, you do need to have your exit strategy in mind when determining what to fix. You need to decide if you are fixing the house to be a rental for a few years. If you are fixing it to retail it or, maybe, fixing the hard stuff and leaving the easy stuff for the bargain shopper. Funding for the End Buyer Way back when I started we did not have a lot of options for the buyers: conventional financing with 10 to 20% down and in a very few cases FHA financing. So back in the early days we did learn a lot about Lease Options and Contract for Deed. Fast forward to 2007 and 2008 and just about anybody who could sign their name could get a loan to buy a house with up to 105% financing. . . CRAZY! Then the housing bubble burst, in part due to all the crazy sub-prime lending and we went back to needing 10 to 20% down on conventional and 30% down on investor purchases. The highlight was that FHA continued to crank out loans, although, this time they had lending standards to meet. When we add in all the people who lost homes to foreclosure over the past few years, we end up with a huge class of people who are good qualified buyers, but because of the foreclosure or short sale, cannot currently get financing, this brings us to offering Seller Financing to get our buyers funding. Anyway you slice it, Real Estate is always changing and there is never a dull moment! The cycles go up and down, the key is to be able to adapt as the markets change. I can’t wait to see a few of you at my Rehab Workshop on Saturday March 16th. —- Donald Tucker
The best place on the entire planet to buy kitchen cabinets.
PRIVATE LENDER, not broker No income, asset or employment verification Quick Approvals and Closings Interest Only Payments, during loan term Closed & Titled in LLC, Corp or Partnership No Pre-Payment Penalties or Hidden Fees CALL US FOR Transactional Funding - 24 Hours or less Flex Funding - 2 days to 6 months Rehab Loans - 100% of costs up to 70% ARV Donald Tucker : 913 -890 -FUND (3863) 913-890www.InvestorsChoiceFunding.com Don@InvestorsCF.com
We Have The Best Prices Everything Is In Stock We Ship Fast Free Design Help www.CabinetGiant.com Josh Burns 1-877-484-4268
For title, escrow, 1031 & foreclosure.
ASSET PROTECTION INSURANCE AGENCY
REO Insurance Forced Place Vacant Property One Policy All Properties Monthly Billing
Bud Whisler 816-380-3441
Failing are you hy
arketing ial Media M
Duncan Wierman Real Estate Investor Internet Marketer How You Can Fix It : 10 Reasons You Will Never Generate A Lead Through Social Media There are tons of articles on the subject of social media and how its being used to generate leads. Many people are saying that they are not getting results. When I teach social media marketing to students, I teach them that it is not a one-size-fits-all-instant-cure and I don’t hype social media is the be all and end all to generating leads. 1. Understand what Social Media really is. You’re working so hard to find “leads” that you can’t see the forest through the trees. Everyone that you come in contact with isn’t a lead, they’re a human being and they want to be treated like one, not as a potential stack of money. Social Media is about building relationships. If you’re not looking to build relationships, then you shouldn't be participating. 2. You Don’t Play By The Rules. There are social etiquette rules. The same way that not smiling while extending a hand to shake upon meeting someone new can ruin your chances of making a friendly impression, so can failing to follow simple social media etiquette. I always recommend that you establish at least a month of social participation on social networks before promoting a business agenda. But most importantly you need to understand the harm in spamming. Nothing will degrade your sincerity and ‘friend’ value quicker that thoughtless self-promotion in the public forum. 3. Your Audience Is Limited. Many people are getting caught up in a numbers game; measuring their success by how many followers/fans they have compared to their competition. It is so common to see real estate investors pitch themselves in Investor centric groups and fan pages. The result of this is that these same investors also follow a huge amount of other investors, hoping for them to return the favor…and they do. But what good is that? Investors are the last people you want following your professional activities because they skew your results. I make a particular mention, when I use my own efforts to
(Continued on page 15)
Guest Speaker Realty 411’s Mid-West Expo Saturday April 20th
MAREI’S MEMBER BENEFITS PROGRAM
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.
YOUR MEMBER BENEFITS
News & Information E-Update
MAREI’s award winning weekly email update with what’s happening in real estate including properties for sale, government affairs and local market data.
Screening for tenants & workers with 20% discount for members.
FORMS & DOCS
Member Library is packed with forms and docs, plus 15 % discount at EZ Landlord Forms for premium forms.
Learn how to save money at Home Depot and register for a 2% Rebate for all purchases & rentals across the US. Plus 20% Discount on Paint in Kansas City. And coming in 2013 the New Home Depot App for iPad exclusively for Chapter Members to use in project estimation on home repair and remodel.
The award winning newsletter for MidAmerica Association of Real Estate Investors: published monthly and distributed both in print at our meetings and digitally to our database of over 5000 people. One of the best ways to get your message in front of a targeted group of real estate professionals.
Market your rentals on the nations top ranked rental site. Member discount is 20% off Regular Prices.
All members receive a discount card to access our exclusive discounts up to 40% off all paint, supplies, and flooring—nationwide.
Free issues of both magazines available at the monthly meetings of MAREI. Websites for investors, landlords, and other services. FREE trial.
Save on select FedEx Office copy and print services up to 20% and on FedEx Shipping up to 22%.
Receive discounts up to 65% on over 12,000 products you use the most online and in store.
Email and Social Media Marketing, Free Trial and Discounts for paying in advance.
We have several services as part of our website to help you grow your business.
Nearly 70% of QuickBooks users say that it makes their business more profitable. Get your Accounting on track. Buy at a 20% discount our special links from the MAREI Web Site.
MAREI’s Political Advocacy Group actively monitors national legislation and rule-making that impacts the real estate industry and harnessing the strength of MAREI members at the grassroots level. MAREI members also receive timely Calls to Action when there is a time for our members to take action on an important vote. Members also have access to the latest in Market Data.
REAL ESTATE BOOKS
The nation’s largest provider of real estate training materials, DEARBORN is America’s Premier Real Estate Publisher. Members receive up to 40% off.
Calendar of Events to stay up to date with all of our activities.
Special member discounts for members at Avis, Budget, and Enterprise Rentals.
Browse the member properties to find your next deal. Take the time to post your investment opportunities for other members and site visitors to browse.
ww.MAREInet.com The Member Library is packed and ever growing with pdf versions of entire books, EBooks, Articles, Forms, and Documents. Look under Resources & Members Only
The Local Market Monitor tracks real estate sales and economic trends nation wide. Offering 25% Discount for Members.
Clauses ssential E
ll Bronchick . . . Bi
Congratulations! You just purchased that new home study course. You followed the instructions. You found a good deal. You present your contract to the listing broker, and you get laughed at! The reality is, real estate brokers don't like "seminar" forms. They are comfortable using the "standard" agreement, although the standard agreement is usually drafted to protect the real estate broker, not you. You must learn how to take any "standard" agreement and modify it to your liking. The following are some essential clauses I use when buying a property: “And/or assigns” or “and/or Nominees” - As the buyer, you want to have the right to assign your contract. By placing your name with the words, “and/or assigns,” you automatically give yourself that right. The words, “and/or nominees” is not as broad, but it has been interpreted as giving the buyer the right to place title in the name of a trust. NOTE: If the contract contains an "anti-assignment" provision, you must cross that clause out. Inspection Clause - Have the right to make the contract contingent upon your right to do a thorough inspection before a certain date. Make certain that you are not required to hire a professional inspector and that the inspection clause permits you to cancel the contract if there are things wrong with the property and the seller is not willing to fix these or reduce the price. Choice of Escrow Company - As the buyer, insist on the right to choose the title or escrow company so that you remain in control. A conservative or uncooperative escrow or title company can make life very difficult if you are trying to do a creative deal. Right to Extend - Most contracts call for a date cerPage 12 tain for closing. If the buyer is not ready to close, the seller can hold him in default. Here are some tips for buying time: Make the closing date “on or about” June 1st. What does “on or about” mean? I’m not sure, but it certainly means LATER than June 1st! Have the right to extend the closing date if it is not your fault: “Said date may be extended an additional fifteen (15) days if lender requires additional documentation, paperwork or actions from the buyer and said delay is not due to the fault of the buyer.” Have the right to extend for thirty days by paying the seller the equivalent of one month’s mortgage payment. Limited Inspection Clause - Most standard broker contracts give the buyer the right to make the contract contingent upon the right to do a thorough inspection before a certain date. Make certain that the inspection period is short and that the inspection must be done by a licensed (if they are in your state) professional inspector. Limit objectionable items to roof, plumbing, electrical, heating and structural defects. An openended inspection clause will permit the buyer to "weasel" out of a contract because the garage door squeaks. Choice of Escrow Company - As the seller, I insist on the right to choose the title or escrow company so that I remain in control. A conservative or uncooperative escrow or title company can make life very difficult if you are trying to do a creative deal. Qualification of Buyer - The most important thing to keep in mind when selling is that time is money! The single biggest mistake sellers make is allowing an unqualified buyer to tie up their property under contract
(Continued on page 15)
Offering a range of flooring options to give wholesale pricing and discounts to trade professionals.
ProSource of KC West
7228 W. Frontage Road Overland Park, KS 66203 913-599-4488
Residential Commercial Renovation Demolition Flatwork Foundations
Full service construction company offering upgrades, curb appeal, remodel, or complete renovation. Call for References!
Robert Massey Building Trades 816-868-1817
Accurate Closings: Smooth, Timely, Professional.
Title Services Provided for: FSBO, Wholesale, & REO Transactions New Construction Closings Commercial Purchases and Refinance All Types of Loan Closings 1031 Exchanges FHA, VA, USDA, Conventional Loans, and Hard Money Loan Closings Refinance & Reverse Mortgages Doc Prep, Prelim HUDS, Curing Issues Short Sale Closing & Assistance 100 Years of Combined Service!
www.AccurateTitleCo.com 913-338-0100 phone Investment News
SHOWHOMES ADDS VALUE TO VACANT HOUSES BY:
Transforming vacant houses into valuable, cared-for homes that buyers respond to. Keeping each home in show-to-sell condition seven days a week. Employing a professional decorator to decorate each home using proven staging techniques, maximizing its appeal to buyers. Hiring carefully screened and qualified Home Managers to live in and manage each home throughout the sales process.
WELCOME NEW & RETURNING MEMBERS!
Day Boswell (since 2010): Overland Park, KS Michael Bryant (since 2011): Lee’s Summit, MO Kim Donaway (since 2007): Mission, KS Brett Hoover (since 2012): Independence, MO Nancy Hoover (since 2012): Independence, mo Paul Redmond (since 2008): Kansas City, KS Tom Smith (since 2011): Lees Summit, MO Gary Swaney (since 2010): King City, MO Mary K Swaney (since 2010): King City, MO Tim Stauffer (since 2009): Kansas City, MO
John Baska: Parkville, MO Lukas Bohannon: Columbia, MO Chelsie Dillon: Kearney, MO Susan Ellis: Kansas City, MO Vinay Gaws: Lees Summit, MO Shaun McBride: Kansas City, MO Bill Mikkelsen: Gladstone, MO Bill O’Connor: Kearney, MO Kevin Otterman: Brian Rigby: Rogersville, MO Victoria Roberts: Kearney, MO Cindy Stockton: Kearney, MO
New Business Members
John Shaver – Pro Source KC West: Merriam, KS Hanna Kinsey – Pro Source KC West: Merriam, KS Robert Massey – Building Trades: Kansas City, MO
(Continued from page 9)
(Continued from page 12)
email, DM, PM, or comment you don’t respond promptly, or at all. This leaves the impression idea that you’re not interested in fostering a relationship. We live in an instant gratification society and failing to respond to an online request within a reasonable amount time (as defined by the other party, not you) will cost you business. Fortunately, FB has just started to notify fan page admins of wall postings in addition to comments, which had been a problem for many that didn’t check their page (s) at least once in the morning and evening. So no excuses! 8. You Chase Your Tail. You’ve got the same 10-100 people who are subscribed to your blog, following you on twitter, and liking you on Facebook and most of them are close friends and family that didn’t want to hurt your feelings. They either ignore your content or participate just to boost your ego. Either you get the hard truth, or you end up fooling yourself that you’ve got great content and an attentive audience. If you aren’t reaching a new, broader audience, you need to consider a few things: Perhaps your message is missing the mark or just plain uninteresting. Or, maybe you just need to raise the bar and market the page more effectively to find a larger audience. 9. You Spend All Your Time Looking at Others.
Rather than coming up with a game plan of who your audience is and what they want to experience, you simply start a fan page and begin mimicking what you've seen done by other investors. There is nothing wrong with following other real estate investors who are great examples. The challenge however, is that most are poor examples and nothing but a loss for your time investment. Stop paying attention to online chatter and spend more time working on your own content. Figure out who your audience is and what it is that they want you to talk about. 10. You Don’t Care that Everyone Can Tell That You Don’t Care. You forget your login/password because you never login to your sites. You probably got inspired to start with social media, and you took some steps to build your online presence. You create an account on Facebook and Twitter, put links up to these accounts on your website(s), break rules 1-9 and then setup an automatic program to post your blog feed to your account. Predictably, you forget your login/password because you never visit either again. Anyone that happens to stumble across your message sees the tumbleweed rolling across the ignored prairie and exits via the back button and on to your competition’s account.
for two months. Do not believe any claims of the buyer, his agent or mortgage broker about their ability to qualify for a loan. You should know exactly what the qualifications are for an FHA or FNMA loan in your area and qualify the buyer yourself. I use the following clause: "Within 48 hours, buyer shall provide seller with buyer’s complete financial and credit information for seller’s approval. Within 72 hours after receipt of such information, Seller may terminate this contract and refund buyer’s earnest money if, in seller’s sole opinion, buyer does not have the creditworthiness to qualify for a loan from a third party. Seller’s decision and opinion shall be final in this regard, and buyer shall have no further recourse after return of this earnest money deposit." NOTE: Be certain you do not engage in illegal discrimination in rejecting a buyer's credit worthiness. Permission to Contact the Lender I hate being in the dark! I always want the ability to control the entire loan process and be able to get information from the lender along the way. The buyer's lender won't talk to you directly, without express written permission of the buyer. To remedy this problem, insert the following clause: "Buyer hereby gives express permission to all parties, including lenders, employers, financial institutions, credit agencies, mortgage brokers and real estate agents to release any appropriate financial information to the seller." Now you can take control, get on the phone and scream "What's holding up this lan!"
A Professionally Managed Real Estate Auction offers so many benefits to real estate owners and buyers that traditional methods of marketing simply can’t provide. More Real Estate is SOLD at Public Auction today than ever before and here are Several Reasons Why:
1. Real Estate Auctions guarantee a Sale
Date, a Price and a Closing Date. Traditional marketing methods offer no guarantees.
ell at hy S W ction? Au
7. Real Estate Auctions offer scheduled viewing and tour dates.
2. Real Estate Auctions don’t set a maximum
price for your property.
3. Real Estate Auctions will often generate a
higher price for your property than it would have sold for using traditional methods of marketing because of competitive bidding.
8. Real Estate Auctions eliminate any
contingencies and the need for inspections.
4. Real Estate Auctions compel buyers to
participate and buy on a specific day.
9. Real Estate Auction marketing promotes your
property on a national level which exposes your property to many more qualified buyers increasing competition and prices. Real Estate Auctions work when the client wants to sell their property in the shortest time, at the highest price with terms and conditions favoring the seller.
5. Real Estate Auctions create excitement,
urgency and competitive buyer participation for your property, which results in success and a higher selling price.
6. Real Estate Auctions eliminate the hassle of
negotiations and counters on everything except the top market price for your property.
Getting your rents . . . A conversation with a couple of MAREI members. At the monthly meeting in January, Debra Felderhoff mentioned a method she uses to ensure that she gets paid when a tenant is going to be late with rent. She said she learned this method from Brian Winberry, who is one of our hosts of the Weekly Wednesday Networking event. We took a few minutes to talk with Brian to get the low down. When a tenant calls to say they can’t quite make rent on time, but will be able to make the payment in a few days or a week, landlord should then take the time to negotiate and write up a promissory note for the rent that outlines the amount of rent to be paid, the late fees, when it is supposed to be paid and that if the rent is not paid, they will agree to move out. This promissory note serves several purposes. First, it gets the tenant in the frame of mind that they owe the rent and late fees on a particular date or that they will move out. They have signed a legal document, the promissory note. Now, it may be important to note they also signed your lease agreement that is also a legal and binding agreement, but they signed it quite a while ago and the recent signing of the promissory note will remind them. Second, the promissory note is something that if not paid could be taken to small claims court to receive a judgment, with out going through and eviction process. Third, the promissory note is also a legal document that could be sold. A promissory note of this type would not have a huge value if it is resold, but it can be sold for a small amount. Brian’s method and Debra’s are about the same to this point, but Deb had one difference that it is worth noting. Deb would make her promissory note a title loan that is secured by the title to the tenants car. Then if the tenant did not pay or move out, she could take their car. It is important to note that Debra with her almost 100 rental properties has never had to take someone’s car. She has had people move out and leave the property broom swept clean when they could not pay as the promissory note said, saving her the cost of eviction fees and allowing her to get her property rented up quickly.
W H Y E V E RY REAL ESTATE INVESTOR
MUST LEARN NOTES
< 500,000 REO’S IN USA MARKET
ve See Eddie Speed Li St Louis Missouri Saturday April 27th www.StreetREIA.com Or learn right now: NoteSchool.com/Vid
12 MILLION DELINQUENT MORTGAGES
W. Eddie Speed is Founder of NoteSchool. Since 1980, Eddie has dedicated his career to the science of buying both Performing and Non-performing Notes.
EXPO: Saturday, April 20th, 2013 Holiday Inn, Overland Park West PROPERTY TOUR: Sunday April 21st Register: MAREInet.com/Realty411 FEW BOOTHS STILL AVAILABLE
Realty 411 Mid - West Expo MidReal Estate Investing is has become one of the hottest trends for entrepreneurs to make money. Attendance at real estate associations meetings is way up. Many of the Richest People in the Country, earned their wealth through Real Estate. Find out the reasons for this at the Expo. Join 200 or more local, national and international Investors at one of the Biggest Events in the Mid-West to learn:
√ SAVE THE DATE √ REGISTER √ BUSINESS CARDS √ INVITE A FREIND
How to Harness the Internet to Explode Business with Duncan Wierman, Internet Marketer Turned Real Estate Investor The “Power of Zero” for True Wealth with Chris McClatchey, Veteran Real Estate Investor & Coach No B.S. Insights to Entrepreneurship with Mike Conlon, Main Street Millionaire, invests in Mobile Homes & Turn Key Why NOW is the Time to Invest in Kansas City Properties with Marck de Lautour, local Kansas City Investor Plus See & Be Seen with 200+ Investors, Learn from Expert Industry Service Providers and Tour Some of Kansas City’s Best Investments!
My new Client: the FBI! Donald Gossman
The Case You might ask why a residential real estate appraiser from Kansas City has the FBI as a client. Many appraisers were approached in the frenzy of the sub-prime mess to over value properties. To hit the number that the lenders needed. We are finding the damage that this is causing our economy and our country. On October 10, 2006 I received a phone call that changed my life and sent it in directions I could not have imagined. It was a sub-prime lender wanting to know if I appraised highend properties in the Kansas City Country Club District. I replied yes and quoted them a fee. I instructed the lender to place an order on my website and to fax me a copy of the contract. I reviewed the contract for $1,473,000, and then ran MLS to search for comparables and the subjects listing history. The MLS for the subject property showed it as an active listing for $699,000. I called the lender and asked if I had the wrong address or if this was a construction rehab loan. I stated, “Did you know this house was listed for $699,000?” The lender said yes. I was told they were selling it for the higher value, and if I wanted my fee I had to appraise it for that amount. They wanted me to jeopardize my reputation and 28 years in business for $1,200. I declined the order and called the listing agent to warn her. The realtor noted she knew nothing about the contract. The sellers had excluded this buyer when she received the listing and were cutting her out of the commission. I was enraged because I knew the mortgage system was broken and someone needed to act. I had attended the Appraisal Institute’s Mortgage Fraud Seminar the week before and met an agent with the FBI, Julia Jensen. I decided to call and let her know what was going on so she could put the property on a watch list. Agent Jensen called me back the next day. I discussed the details with her about what was happening. She asked who the buyer was and I told her the names. She informed me they were part of a mortgage fraud group operating in Kansas City and she would be interested in the information. She also asked who the sellers were. I gave their names. She replied, “Let me grab another agent and we will see you in 20 minutes”. That was not the reply I was expecting. I was at my office waiting for two FBI agents. I kept wondering what I have gotten myself into? They arrived at my office and I showed them the information that I had obtained. They asked if I was familiar with the sellers’ names, which I wasn’t. The agents told me the seller’s dad was allegedly a made member of the mob. He was executed in the 1970’s and stuffed in the trunk of a car. This information grabbed my attention. They assured me not to worry about the son, as far as they knew he was not a member of the mob. They asked if I knew who his wife was, and I said no. They said I might know her professional name, which they told me. I knew that name. She had been the Jackson County Executive for the last 12 years and was going to run for Mayor of Kansas City. The agents asked if I could assist them with their investigation. I told them I would. Next, they asked me to call the lender and tell them I would complete the appraisal. Then the agents asked the million dollar question. “Would you tape the conversation?” The moment of truth had arrived. If I said no, then they would leave and I would go back to appraising as if nothing happened. If I said yes, I might be the next person they find in the trunk of a car. They pulled out a recording device and showed me how to use it. They noted the date and time of the call, who was in the office, who I was calling and the case. I called the processor and told her I would complete the appraisal. I tried to act normal when talking with her. I am a real estate appraiser, not an undercover agent. The Investigation After the agents left my heart was pounding. I tried to imagine out how this might work out. They had left another recording device to use while talking with the other people involved in the transaction. I called the selling agent to schedule a time to appraise the home, which we set up for the next Tuesday. I then spoke with the loan officer and processor to let them know the inspection had been set. The processor mentioned that the loan was over 1 million dollars so they would require another appraisal in addition to mine. She
asked if I would call the other appraiser and work together to make the appraisals similar to pass underwriting guidelines. Apparently, committing mortgage fraud was no big deal for them. I called Agent Shaffer and confirmed the time and date was set. He asked if I could drop off the recording device to him on Monday at FBI Headquarters and trade him for a new one. Monday finally came and I drove to FBI Headquarters. It was a three story office building like any other, with exception of the 10-foot high iron fence, blast gate and video cameras at the front gate. I pressed the button and told them who I was meeting with and they buzzed me in. I walked to the front door and was greeted by an armed guard. She told me the agents were on the way down. Once I spoke with the agents, they asked me to come back to the interrogation room. As we walked past the metal detectors, I asked the guard if I needed to go through one.
She replied, “You are an agent, aren’t you? You don’t have to go through it”. I replied, “I am not an agent, I am an appraiser.” We went to the interrogation room and discussed the conversations that I had with the various people involved with the transaction. Another agent came into the room with a camera and took a picture of me. The agents asked if I would be a confidential witness and gave me my code name. It all went so fast I had no time to think about what was happening. We set a time to meet the next day before I was to complete the inspection. Agent Shaffer and I met the next morning in the parking lot of a grocery store. He showed me a different recording device that took both audio and video and how to use it. I drove to the house and the realtor was waiting for me. I took a picture of the front of home with him in the picture, and then took a street scene with his car in the picture.
The realtor could not say he wasn’t there. We went inside the house and the realtor told me this group was going to buy between 40 and 50 homes in Kansas City ranging in value from $1,000,000 to $2,000,000, and his group was doing the same thing in 10 different cities. They had money from overseas to invest and planned to rent out these houses to executives. I couldn’t believe it. This could possibly be a multi-city international crime ring, not just one case of mortgage fraud. I finished my inspection, then left to meet Agent Shaffer. I described the events that took place and gave him back the recording device. Over the next three weeks, I taped conversations with people involved in the transaction. I was doing my appraisal work at night and on weekends since a lot of my time was spent working on the case. I even began to worry
(Continued on page 22)
Hard Money is the Answer . . . .
Leverage available investment capital and triple your cash on cash returns. Have the ability to close in 2 - 5 days. Take down investment properties FAST. Get feedback from an experienced lender who did over 150 deals last year. Build cash-flow quickly and simply through real estate. Diversify your capital across multiple properties and spread your risk.
Property Management Section 8 Housing KC Metro Wide
Jeff Woods Broker www.MyPremierLeasing.com 816-849500
Private Funding for Serious Real Estate Investors Christopher Friedl www.LonghornInvestments.com 214-202-3046
(Continued from page 21)
the right choice when I called Agent Jensen that first day. On my way home, I turned on the radio and switched channels to talk radio. The announcer broke in with a news update. He stated, “A Federal Grand Jury in Kansas City has handed down Mortgage Fraud charges against 11 people including the Jackson County Executive and her lawyer husband.” When I arrived home I turned on the television. The charges were being reported on all of the local stations. I’ve always watched the news, but have never been part of the news. The trial was set for February, but delayed until June after the election. The County Executive did go on to run for the Mayor’s office and received 1.5% of the Vote. The same day her TV ads for Mayor debuted was the same day the mortgage fraud indictments were brought against her. Interestingly enough, no one was talking about the buyers. The fed alleged that the buyers were part of the larger fraud team, which had committed over 100 cases of mortgage fraud in the Kansas City area. Furthermore, the feds also alleged that in the prior 18 months, this mortgage fraud team caused millions of dollars in losses. In May, the Assistant U.S. Attorney contacted me to prepare for the trial. We met with the two FBI agents at the U.S. Court House. We listened to the tapes that I had made which was the first time that I had heard them. I can never explain the thoughts that were going through my head. “I AM AN APPRAISER”. I am not supposed to be sitting in the Federal Court House with the Assistant U.S. Attorney and two FBI agents listening to tapes of myself and individuals committing mortgage fraud. But I was. The trial was delayed again until November 2007. The Trial After the trial was postponed for the second time, the legal maneuvering started between the U.S. Government lawyers and the defense lawyers. Seven people in the transaction pleaded guilty to the charges against them, and four people were left to be tried. I was the lead witness in the U.S. Government’s case that was expected to last two weeks. The jury was to be seated on Monday morning with opening statements to be made late in the morning. The U.S. Attorney asked me to be at the Federal Court House at 1 p.m. on November 6, 2007. I showed up during the lunch break and found out the jury had not been seated thanks to publicity the trial had received which led to larger than normal numbers in the jury pool. I sat waiting in the witness room for four hours. The jury was set and the opening arguments were made. The judge said, “That is enough for today. We will reconvene at 9 a.m.”. I walked out of the court house with everyone else. No one knew how the trial would play out. The investigation had been portrayed by the local media as a political witch hunt by the new U.S. Attorney office against a local politician. I knew nothing about that. All I knew was someone tried to defraud a lender, and I did my job by protect-
about my children’s safety. The other appraiser called me and told me he was having a hard time appraising the property for $1,473,000. He explained that the highest he could get was only $1,200,000. I thought, “You will over appraise it by $500,000 but not $743,000?” I guess he had partial ethics. We agreed to the value and completed the appraisals. The FBI agents asked if I would drop off the appraisal to the mortgage company while wearing a wire. By this point, it seemed like the natural thing to do. I walked away from the mortgage company thinking my part was done and it was all over for me. If only that was the case. My life went back to normal. I had not heard anything for three weeks. On November 24, 2006, I received a phone call from the second appraiser. He asked, “Did you hear what was going on?” I replied “No”. He said, “I received a call today from the FBI and I have an appointment at 9 a.m. to talk to them about mortgage fraud.” I thought, “Sucks to be you”. I told the other appraiser thanks for the heads up. He asked, “What are you going to do”. I replied, “Tell them the truth; they know what is going on”. Agent Shaffer called and told me the closing had tried to occur the prior Friday and they had stopped it at the closing table, at the title company. The FBI was interrogating the individuals involved in the transaction. He asked me not to talk with anyone if they called. He informed me the Grand Jury was set for January 4, 2007, and verified I could be there that day after lunch to testify. The Grand Jury I was contacted by the Assistant U.S. Attorney Linda Parker Marshall. She asked me to come in so she could describe the events that would take place in the Grand Jury Room. I meet with her and the FBI agents at the U.S. Courthouse in late December 2006. It was finally sinking in that this was really going to happen. I was hoping for a lot of guilty pleas so I wouldn’t have to testify, but that would not be the case. The date arrived. I went through my morning like it was any other day. I completed two inspections then went home to put on a suit and tie. I wasn’t hungry for lunch for some reason. I drove to the court house and parked in the FBI lot where Agent Shaffer had instructed me to. I took a deep breath and said to myself, “Let’s do this”. I walked into The U.S. Courthouse knowing if the Federal Grand Jury believed me, they would hand down indictments on 11 people and charge them with Federal crimes. I waited for almost an hour until Mrs. Marshall came to get me. I walked into the room and told my story. I cannot reveal anything about what happened in that room or the people that were there. This was our government working at the basic level of the criminal justice system. I was in there for about an hour and then left. I walked out to my car knowing I had made
ing their interest in the property that they hired me to appraise. They were buying inflated values not appraising houses. I was back in the witness room the next morning feeling confident knowing I was going to tell the truth. After walking down the hall to get a drink, I heard the Judge say, “Mrs. Prosecutor, call your first witness”. The courtroom doors opened and I walked inside. I felt all eyes in the room follow me on my way to the witness stand and while I was being sworn in. Once seated, I looked out over the courtroom. To my right were the 14 jurors, 12 on the jury and 2 alternates. To my left the U.S. Federal Judge and the court reporter. At the defense table were the four defendants, their three lawyers and three assistants. At the prosecutors table were two FBI agents, two Assistant U.S. Attorneys and their support staff. There were four rows of seats for the public. The newspaper, TV and radio stations from the all across the Midwest were in the audience. Linda Parker Marshall, the Assistant
U.S. Attorney, lead my questioning. She asked me my name, address and occupation. She then asked me to describe how I became part of the case. When I was explaining the events that unfolded over the course of many months, I could hear the reaction from the audience. It seemed they were surprised by the actions that I had taken. There is no way that I could ever have imagined how things would play out. After almost two hours, the prosecutor was finished with my questioning. The judge called for a 15 minute break, which I was ready for. They didn’t make the witness seat for comfort. The break was over and the first defense lawyer questioned me for over an hour. His questioning was the toughest as he was questioning MY ethics and the motive behind my actions. He tried to rattle me and succeeded on a few occasions. The judge warned me twice to limit my answers to the questions asked. The second lawyer only asked me two questions and I was done. The third lawyer was less aggressive towards me compared to the first lawyers.
The third lawyer even talked about how I had such a good reputation and could not have been involved in mortgage fraud. I replied, “They called the wrong appraiser to commit mortgage fraud this time”. After four hours on the stand, my part of the trial was complete. The trial would go on for another eight days. The jury deliberated for four days and came back with two guilty and two not guilty verdicts. The mortgage and financial markets are a mess. The industry made it through the high interest rates of the early 1980’s, the recession of 1991, the first and second gulf wars and the effects of 9/11. We need the separation of the origination of mortgages from the valuation of the properties. Enforcement of national and state laws. Prosecution of fraudulent lenders, insurers, bankers, brokers and appraisers. We, the mortgage business, need to rebuild the trust in our banking and mortgage systems.
Insurance for Vacant Properties Rehab Properties Renter Insurance for Your Tenants Business Insurance Umbrella Liability Health Insurance Life Insurance
Property Management Rental Services Kansas City Metro
www.MOFB.com Stephanie Cunliff 816-781-4370
www.JamiesonHomeTeam.com Kevin Jamieson 816-503-4671
2220 & 2222 S Arlington Independence, MO
INDEPENDENCE CASH Christoph Becker COWS!!! 2 HOUSES for Blueprint Properties, Inc the PRICE of 1 only BlueprintPropertySoltions.com $19,500
5443 E. 29th Ter. Kansas City MO 64127 2908 E 25th St Kansas City, MO 64127 30 Metro Properties
4 Bed 3 Bath
4bdrm 3bath FIXER UPPER with New Vinyl Siding and a Good Roof
Christoph Becker Blueprint Properties, Inc BlueprintPropertySoltions.com (816) 461-8299 Christoph Becker Blueprint Properties, Inc BlueprintPropertySoltions.com (816) 461-8299 Brian Rigby BARigby.com email@example.com 417-753-7653
3 Bed 2 Bath
Large 3bd 2 bath Fixer Upper in East Kansas City – 2908 E. 25th St. 64127
A Portfolio of 30+ Properties Selling Absolute—April 19th
7501 E. 52nd Terr. $22,500 Kansas City MO Needs TLC 64129 6638 Indiana ave Kansas City, MO 64132 2809 NW 3rd Tr Blue Springs, MO $13,000 Fixer
4 Bed 1.5 Ba
4 bdrm CASH COW in Christoph Becker KC MO 64129 only $22K Blueprint Properties, Inc NET ROI 24%
BlueprintPropertySoltions.com (816) 875-6266
2 Bed 1 Bath
Cheap Rental Near The Zoo
Chad Barlett Home Remedy Invest. HomeRemedyKC@gmail.com 913-735-5598 Barry Hudson Realty AQ Barry.Hudson@RealtyAQ.com 816-284-8754 2010BWG KCPropertiesSite.com 816-974-8404 Christoph Becker Blueprint Properties, Inc BlueprintPropertySoltions.com (816) 875-6266
$66,000 Turn Key
2 Bed 1 Bath
Newer Home in Blue Springs in HOA
12002 Alberta St Sugar Creek, MO
2 Bed 1 Bath
Need Cash Buyers for my 2 Bed Home! Call Today
1915 N. Allis St. Kansas City KS 66101
$14,500 Cosmetic Fixer
2 Bed 1 Bat
Kansas City KS Fixer Upper – Needs Cosmetic Updates
MAREI Member Properties
6005 E 93rd St Kansas City, MO 64138 4725 Nebraska Av Kansas City, KS 66102 20 S. Boeke St. Kansas City, KS 66101 $76,400 2 Houses 4 Bed 2.5 Bath
2 Houses on 3 acres inPaul Panos side redevelopment district
Stephen Davies DC Home Investors DCHomeInvestors@gmail.com 832-496-5344 Christoph Becker Blueprint Properties, Inc BlueprintPropertySoltions.com (816) 875-6266 Nick McKinnis M&M Brothers Homes MandMBrothersHomesInc.com 816-914-2614 Nick McKinnis M&M Brothers Homes MandMBrothersHomesInc.com 816-914-2614 Nick McKinnis M&M Brothers Homes MandMBrothersHomesInc.com 816-914-2614
2-3 Bed 1 Bath
SINGLE FAMILY RESIDENCE FOR SALE DIRT CHEAP!
5 Bed 2 Bath
Attention Rehabbers – This house is surrounded by newer built homes in an excellent neighborhood! Currently rented. Rehabbed: new carpet, paint, light fixtures, new bathroom remodel, and newer windows. Rented $700/mo Rehabbed: carpet, paint, bathroom, furnace, hot water heated & more. Property managed. Just Rehabbed and ready for a tenant. Rents for $750 a month.
3922 Garfield Av Kansas City, MO
$31,500 Turn Key
3 Bed 1 Bath
3918 Flora Av Kansas City, MO
$31,740 Turn Key
3 Bed 1 Bath
3729 Cleveland Kansas City, MO
$33,830 Turn Key
3 Bed 1.5 Bath
4210 E. 54th Terr. Kansas City, MO 64130 7606 E 111th Tr Kansas City, MO
3 Bed 2 Bath
CASH FLOW 25% NET Christoph Becker ROI!! Turn-Key Investment Blueprint Properties, Inc Property with Section 8 BlueprintPropertySoltions.com Tenant in place
$39,900 Turn Key
4 Bed 2 Bath
Cash Flow in Ruskin – 4 Bedroom Rental home in Kansas City Missouri.
Don Tucker GBI Funding GBIFunding.com 816-523-4400 Christoph Becker Blueprint Properties, Inc BlueprintPropertySoltions.com (816) 875-6266
5500 Olive St Kansas City, MO
2 Bed 1 Bath
Section 8 Turn-Key – Beautifully Rehabbed – Original Woodwork and Charm
Weather you are Buying and Flipping, Buying to Hold for Rental or just offering Properties for Wholesale, you will want to attend this Real Estate Investor Workshop for Kansas City Real Estate Investors on Rehabbing Houses. Workshop to be taught by MAREI founder, veteran rehabber and hard money lender Donald Tucker. When you go out to look at a property to buy, you learn from all the gurus that to make your offer you need to know three things:
1. How Much Profit YOU Need 2. What the House is Worth 3. What it Will Cost to Fix
Take the Time to Learn before you Jump In:
What items to focus on when looking at a potential property What items should be fixed, repaired or replaced for best profits. How to Estimate Rough Costs of Rehab Where to Find Contractors and Manage Them Where to find the Funding for your Rehab Projects.
Take Advantage of this Rehab Workshop to Buy the Best Properties and Have Smooth Process. This is a Must Attend Workshop for all Beginning Investors on their Way to Rehab, Rental, or Flip Profits
MAREInet.com/Workshop Saturday March 16th / 8:30am to Noon Career Education Systems / Ward Pkwy Members $30 / Non-Members $45 3 Credits PHP
KC North: North Kansas City Community Center 1999 Iron Street Kansas City, MO
David Nachman NachmanLaw.com 816-285-6029
5:30 Set Up for Vendors & Speakers 6:00 Registration Vendor Hall 7:00 Introduction 7:15 Presentation 8:30 Networking 8:50 Clean up and Adjourn at 9pm
KC South: Career Education Systems Ward Parkway Shopping Center 8600 Ward Parkway Kansas City, MO
5:30 Set Up for Vendors & Speakers 6:00 Registration Vendor Hall 7:00 Introduction 7:15 Presentation 8:30 Networking 8:50 Clean up and Adjourn at 9pm
Don Gossman GossmanAppraisals.com 816-941-4750
Subscribe & Sync
The MAREI calendar is hosted on Google Calendars. This allows you to subscribe to our calendar and sync it with your own Google Calendar, Mobile Calendar, or Outlook Calendars. Check calendar for times and locations.
Sun Mon Tue Wed Thu Fri 1 Weekly Wed. Master Mind w/ Winberrys Sat 2
SG: Connected Inves- SG: Blue Springs / Independence Inv. tors
Workshop: Landlord 101
3 SG: Lees Summit Investors Network
6 Weekly Wed. Master Mind w/ Winberrys Deadline: Vendor Table KC North
9 SG: Blue Springs / Independence Inv.
KC Northland on the 1st Thursday of the Month: Contracts Lake Ozarks REIA
14 15 Deadline: Newsletter ads & articles for March
10 SG: Lees Summit Investors Network
11 Deadline: Vendor Tables for KC South Meeting
13 Weekly Wed. Master Mind w/ Winberrys
16 SG: Blue Springs / Independence Inv. Workshop: Rehab 101 23 SG: Blue Springs / Independence Inv.
KC Metro South on the 2nd Tuesday of the Month: Appraisals
17 SG: Lees Summit Investors Network
18 Omaha REIA
20 Weekly Wed. Master Mind w/ Winberrys
24 SG: Lees Summit Investors Network
27 Weekly Wed. Master Mind w/ Winberrys
SG: Connected Inves- SG: Blue Springs / Independence Inv. tors
Landlord 101 Workshop
3 SG: Lees Summit Investors Network
6 Weekly Wed. Master Mind w/ Winberrys Deadline: Vendor Tables for KC North
9 SG: Blue Springs / Independence Inv.
KC Northland on the 1st Thursday of the Month
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.