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MID-AMERICA ASSOCIATION OF
REAL ESTATE INVESTORS
NETWORKING : EDUCATION : COMMUNITY : GOVERNMENT April 2013
U -A O Y T A
In This Issue
Multi Family 6 8 10
Fundamentals— Do Not Face a Cliff
The Real Estate Industry
Has Seriously Dropped the Ball
Grab Attention & Increase Leads
Self Storage 14 18 20
Market Your Self Storage Facility at Maximum Velocity
Getting Established Your Business Resume Case Study Real Estate Investing Food for Thought 24 Funding Your Deals 8 Step Process Every Issue 12 18 22 28
Benefits at a Glance Membership Investment Opportunities Monthly Calendar
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Personal Real Estate Investor Magazine March / April 2013 Special Feature Section NoteWorthy Guide to Profitable Investing in Real Estate Notes
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Nov 13, 2012
ictor Calanog, N 11:59 AM, By V
Much has been written recently about potential risks to overbuilding in multifamily—in fact, I commented on this issue last April in my NREI column, but I noted that analyzing the supply side is not enough. Demand for apartments will remain strong, and will rise further if economic growth quickens. Apartment fundamentals have bounced back robustly since the recession ended in June 2009. Despite middling economic growth, the national vacancy rate dropped sharply from a peak of 8.0 percent at the end of 2009 to 4.6 percent in the third quarter of 2012. Vacancy rates that are this low have not been observed since late 2001. Asking and effective rents have risen for 11 consecutive quarters and in many areas have surpassed previous peaks achieved in the third quarter of 2008, before the fall of Lehman Brothers. Landlords face little pressure to offer concessions given how tight rental markets are in most places. Construction also remains tight, with less than 37,000 units coming online over the last three quarters of 2012. An additional 18,000 units are expected to open their doors in the fourth quarter; that adds up to about 55,000 units for the year, a slight increase from 2011 but well below the 125,000 annual average from 2000 to 2009. GRADUAL RETURN TO NORMALCY Earlier in 2012, there were signs that construction would spike in 2013, in the order of 150,000 to 200,000 units. Developers have since postponed many projects to Page 6
2014, so that 2013 figures hover closer to 130,000 units—not far off from the pre-recession 10-year average. The “bubble” now shows up in 2014, but if economic growth ramps up by then (Moody’s Economy.com is projecting GDP growth of over 4 percent in 2014, up significantly from 2.0 percent in 2012 and 2.9 percent in 2013), the additional supply will most likely be absorbed relatively painlessly. This is not to say that certain metros will not be at risk. Washington, D.C. and suburban Maryland, for instance, both face historically high inventory growth prospects over the next couple of years; these metros cannot rely on solid demand drivers like strong employment growth in certain sectors such as tech to push demand for rentals like Austin, Texas or Seattle. While the single-family housing market finally appears to be on the mend, this does not automatically mean less demand for multifamily. Jay Lybik, vice president for market research at Equity Residential,
(Continued on page 7)
a Chicago-based REIT, tracks move-outs very closely every quarter and has witnessed little to no change in the number of residents leaving to buy a home. Data from the National Association of Realtors also shows first-time home-buyers percentage of sales flat after spiking due to the Home
Buyer Tax Credit, which expired in 2010. Single-family homes that are
(Continued on page 26)
MAREI April 4th Monthly Meeting With Worcester Investments
6:00 pm Networking 7:00 Announcements 7:15 Presentation
The Trusted Name in Kansas City Apartment Investing www.Worcester-Investments.com
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Investment News Page 7
y r t s u d n I e t a t s E l a e The R e h t d e p p o r D y l s u o i Has Ser Ball!
The Real Estate Industry has seriously dropped the ball! And this is not a recent occurrence…. The big winner through the past few decades has been the financial services industry. People have to invest their money somewhere, and when real estate agents, brokers, property managers made it FAR TOO complicated to invest in houses, they turned to the sophisticated and finely tuned model of the stock market. This well-oiled machine has done a great job of catering to those in their wealth accumulating phase of life. And it seemed that only those real estate investors that were ‘hands on’ with their investments were the ones able to buy and properly manage rental property. The fact that Financial Advisors have ingrained themselves in American culture to the point that anyone wanting to put some money aside for retirement is naturally going to do it through mutual funds or stock investments says a lot about their customer service! Not that investing in the stock market is a bad thing! Not at all…..but by comparison,
Page 8 MAREInet.com
the fact that the RE industry has languished behind in allowing the average John Doe an avenue to invest his hard earned money in Real Estate is a real shame. Now dawns a new age of investing . . . where geography and physical presence mean nothing. In the same way that you don’t need to drive to Atlanta and tour the Coca Cola plant to feel comfortable investing in Coca Cola stock, SBD Housing’s detailed 9-page Investment Prospectus more than prepares an investor to make an informed buying decision. SBD Housing Solutions is a Kansas City based operation but
(Continued on page 9)
(Continued from page 8)
has clients from as far as Brazil, the U.K., Australia, South Africa and Hong Kong. Most have never seen the assets that they own, and yet are cashing the monthly rental checks every month like clockwork. As an all-inclusive real estate investment firm, we specialize in building wealth for our clients. Taking a leaf from the Financial Planners book, we actually take the time to sit and discuss a plan of action with our clients; where do they want to invest, what cash do they have available, do they plan on leveraging their assets, when will they be looking to use the cash flow as an income source for retirement, all of which are just pieces of a very personal and unique puzzle. At SBD Housing Solutions we handle the entire operation for our clients. From target-
ing properties, the acquisition, utilities, construction estimates, project management, remodel, bill payment, leasing and property management. Our clients know that the ‘value added’ is in the details. Being able to invest in Real Estate with the same ease as the stock market has always been the goal.
Although I am not naïve enough to think I can change an industry single handedly, I believe that we in the Real Estate services industry can all do our part to bring some credibility back to the sound investment option that is…..housing. Marck de Lautour, BBA MBA SBD Housing Solutions
Building Wealth Through Real Estate www.SBDHousing.com 816-994-9401
Why Buy Now In
MAREI April 9th Monthly Meeting With Marck de Lautour
6:00 pm Networking 7:00 Announcements 7:15 Presentation Investor & Business Members No Charge Non-Members / Internet Members Fee
More info at www.MAREInet.com/KCSouth
Realty 411’s Mid-West Real Estate Investing Expo
Saturday April 20th No Charge Register MAREInet.com/Realty411
Buying Bus Tour Sunday April 21st
o t s d r a c t s o P o i d u A e s How I U e s a e r c n I d n a n o i t n e t t Grab A . s ’ O B S F Leads from
Duncan Wierman Real Estate Investor & Internet Marketer Article from Duncan Wierman at www.DuncanWierman.com
Audio Postcards will bring leads faster working FSBO's
I set up the search to display results: All houses within 10 miles of ZIPCODE with 3 bedroom, 2 bath , garage. Then I will view each property the search returns to me. Then I go to the contact information section. In the email reply form, I simply cut and past the code from AudioGenerator to the form and press submit. Voila. Offer is done. I direct them back to my website and then I collect only the motivated seller leads. This is also a great way to post your customers audio testimonial right on your website. I also recommend using these postcard to make generic house offers to open the door to negotiations. This simple postcard took all of about 5 minutes to create. Think of the impact this type of product could make on a promotional campaign. You could announce your house buying program to motivated FSBO sellers, talk about a new property you just listed, send a thank you note. The ways you can use this are plentiful. Best of all the process is very simple doesn't require the listener to download any software or plug ins. On first thought, they may seem like a a cutesy-gimmicky
Listen to my Sample: http://www.MAREINet.com/Audio-Gen This is such a great marketing method. On our FSBO marketing we do, we get nearly 30% calling us back. That is phenomenal. Below is the audio I used in the postcard as a sample for you to listen to.
Making Offers with audio postcards
The strategy I use is quite simple for making offers. I will set up searches on sites: www.fsbo.com www.forsalebyowner.com www.owners.com www.4salebyownerusa.com www.topfsbo.com www.buyowner.com
HARNESS THE INTERNET AND EXPLODE YOUR REAL ESTATE BUSINESS WITH DUNCAN WIERMAN
solution but not many people are using this techniques to bring them deals. Try it! AudioGenerator created a great service!
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Market Your Self Storage Facility At
Wow, you have the keys! NOW WHAT? You are at YOUR self storage facility. Even though occupancy is lower than you want it to be, suddenly you feel your excitement level building. Why? This is your dream, you are an entrepreneur now. You see the future, your dream and are ready to make it happen. What does the average renter think about when they think self storage? Downsizing? De-clutter? Too much stuff, but want to keep it? Think about how often you see self storage facilities. It must be a busy business with people storing their treasures, because self storage is everywhere. It would be nice if those of us in self storage had a magical self storage wand to wave and “Voila, we have 100% occupancy!”. Unfortunately the average is 76% occupancy. Why? Because we do not use everything available to us. So, how do I promote my facility. What will make my place stand out and above the rest? Owning or managing a self storage facility will allow you to get to know the customer service industry up and close and personal. BUT, it goes beyond that!!! How do you spread the word about your facility? Do you do any of these? • What is your web presence? Do you have a website? Is it accurate? Does it do what you want? Have you tried local advertising? Flyers, newspapers and signs. • Community sponsorship; i.e., churches, community sports, parades... • Media: do you have a Facebook or Twitter account? Air spot on the radio, TV news commercial? •Your current clients: Did you let them know that there was a change in management, have you asked them to tell friends? Have you let them know you appreciate them? • Are you promoting it: car wash, free dump day, customer appreciation day? Typically when visiting a self storage unit facility, you will be greeted by the self storage manager or owner. First impressions are always the BEST! Customer service, that’s a huge key to success in this industry. We go through a checklist in our training, it goes something like this: • Find out the needs: large vs. small, long term vs. short term • Why do they need self storage? Then appeal to them on that level: moving, business, divorce, downsizing, college student. •Have you told them about the discounts, perks and added advantages you offer? 24 hour security, easy rental payment, temperature controlled units. • Don’t forget to tell them about how they can save money: referrals, upgrading, first month free, savings for auto pay. • Let them know about extended services: need a truck? How about a business center? Boxes? No problem we offer those here. Let them know everything that they can do in your one stop location. •Have them fill out a visitor’s card and the show them around, let them know the units available in the size they want. **Extra tip: follow up with them if they leave and reach out asking if they found what they needed. If not you are still there to help. You can bet that “in the day of the life” of a self storage owner or manager, it will rarely be a dull one. It takes patience and the outstanding ability to communicate well with both agencies, your staff and your tenants. Your potential hinges on happy tenants. With the right tools and the right education or coaching, your experience as a Self Storage Owner or Manager can be the start of a rewarding career in the self storage industry. Author: Kevin Rollings, CSSM© is the owner and CEO of Alcatraz Storage, Hoosiers Self Storage, and Self Storage Facility Management. He will have a booth at the Realty411 Mid-West Real Estate Investor Expo. Whatever the situation is Kevin and his team have the answers! Visit online at: www.selfstoragefacilitymanagement.com and get your 30 minute evaluation FREE!
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Albert Abraham (since 2009): Shawnee, KS Josephine Abraham (since 2009): Shawnee, KS Jerry Blair (since 2010): Weston, MO Jeffrey Bonner (since 2010): St Joseph, MO Larry Christensen (since 2008): Weatherby Lake, MO Jennifer Crouch (since 2011): Overland Park, KS Chris Elliott (since 2009): Leawood, KS Ed Ethington (since 2008): Kansas City, MO Mark Fortin (since 2010): Raytown, MO Eric Gentry (since 2013) David Klein (since 2011): Kansas City, KS Dick Klein (since 2011): Kansas City, KS Sharon Klein (since 2011): Kansas City, KS My Le-Tam (since 2008): Grain Valley, MO Nan Li (since 2010): St Joseph, MO Rod Longanecker (since 2010): Osage Beach, MO Joyce Myer (since 2009): Kansas City, MO Marilyn Mai (since 2007): Salina, KS David Nachman (since 2004): Kansas City, MO James New (since 2007): Kansas City, MO Tom Novacek (since 2012): Grandview, MO Dena Odom (since 2011): Prairie Village, KS Ben Rao (since 2011): Lee’s Summit, MO Kathleen Stegman (since 2007): Leawood, KS Steven Swanson ( since 2007): Lee’s Summit, MO Bob Van Cleave (since 2008): Basehor, KS
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KC Show Homes: Kent Welch & Michelle Davis
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Establish Your Business RESUME
This article was adapted from an article written by W. Eddie Speed for the training of buyers and sellers of mortgage notes, but the concepts are valid for all forms of Real Estate and for finding private lenders. One of the most important tools for success is presentation of your company. In the beginning a company needs to make a statement about itself. This can be accomplished in the name you select and any logo or design that you create and becomes your signature. This signature becomes your identity and makes a clear statement of your business. Your signature needs to appear everywhere, and every time you do business. it should be attached to each of your emails on your signature line, on your letterhead, on your fax cover sheet, on your business cards, on your bid sheets. Your company name, your logo, your signature is your statement you are ready to do business. It makes you powerful. Consider the clientele when you select your operating name or DBA, Doing Business As; FBN, Fictitious Business Name; LLC, Limited Liability Corporation; INC, Incorporation. You will be knocking the doors of Financial Businesses and Corporations. From your very first introduction you want to lay the ground work to be taken serious in this very serious business. When notices are sent to the mortgagors, attorney’s, Bankruptcy trustees, you will want your signature to make a short and powerful statement. So if you were to select KC Home Buyers, LLC or ABC LLC would be a better choice that Super Cool Real Estate Investors. Credentials Building a resume, remember your resume is a business resume not a personal one. Of course you are your business, but at the same time they are not so much interested in the jobs you had in the past 10 years but in the knowledge you have acquired from those jobs. They want to see an establishment worthy of doing business with and the leaders of that establishment. It is important how you present yourself. If they do not know you they will need to have some tangible evidence of your stability, so a good resume with practicing knowledge of what you are doing is good also. “I have been in the note buying business for 5 years and have traded notes with ABC lender, Colonial Finance, etc… Something that says you did not wake up this morning and decide I want to buy something… ahh, notes sound good! They do not have time to teach you. In additions you will need some reputable references. Your bank President, if you do not know him well enough to put him on your resume shame on you! Two bank presidents, even better. Officers of Civic groups, references that say you are in good standing and well known and respected in your community and business world. Remember you are going to be collecting notes that had their company name on them, they do not want to risk selling them to inexperienced, potential problem makers, they cannot afford to risk their reputation. Join the Chamber of Commerce. Let everyone you know, know you buy defaulted notes. Carry your business cards and pass them out frequently. You never know who has a connection with which bank or lender who would perhaps be interested in something you have purchased. If you are looking for private funding, your credentials will come into play as it does in note investing, and can also be helpful in other areas of real estate. Chamber Member Belonging to your local Chamber of Commerce and attending their weekly meetings are a good habit to get into. There is usually a representative from each local bank at the meeting. In fact, there is a wide variety of businesses at each meeting. it is a wonderful place to become comfortable in introducing yourself, explaining what you do,
who you would like to do business with and what you may have to offer or gain. The Chamber is always a full house of businesses who want to talk about themselves and listen to you talk about yourself; a great place to become proficient in your favorite subject, your business. Listen to what people have to say about themselves and tailor your speech by picking up good habits you hear, not repeating bad habits. Financial Ability You are going to be doing business with corporations, lenders, banks, and mortgage companies. All of these institutions are governed by lending laws. They will want to know as much as possible about who they are selling their loans to. You will want to build a good report with the institutions you want to do business with. You will want them to be so confident in you that they will come to depend on you as the person who will be reliable to make a quick solid purchase of the
notes they have to sell. Most of these companies will not be local to you so in order to “meet” them you will be making a phone call and you will want to have a resume with good credentials and references. You want them to feel confident in your ability to purchase the notes and to handle them under the same legal guidelines they must. Name and Organization The process of setting up your business offers a wise variety of choices with each has pros and cons. Listed below some web sites that have easy to follow guidelines and helpful information. If setting up a corporation or LLC is more that you want to take on at the moment filling a DBA may be better suited for you. One fabulous certainty, we live in a time when there is an overabundance of information on the web if you look. Some good websites to explore if you are attempting to establish a new company your-
self: www.activefilings.com/resources www.entrepreneur.com www.mycorporation.com Creating you own domain name If you would like to create an email address and include your company name there are many avenues to accomplish the task. Depending on who you are getting your email service from will drive the selection choices for your email address. These are some of the many free email services: www.hotmail.com www.yahoo.com www.google.com With free web mail services you can create a name like: firstname.lastname@example.org email@example.com Or you can purchase your own domain and create versions like:
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 Sign Up At www.StreetREIA.com
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.
I recently attended a training event and was exposed to an interesting real estate investing model that I wanted to share to get feedback from everyone who reads this article. This model involves finding motivated sellers, using a bird dog, seller financing and buying and selling notes. At the start of the scenario the person in charge of everything is the Facilitator. The Facilitator has been working on coaching a group of bird dogs on how to go out and find highly motivated sellers in lower end priced neighborhoods that retail around $50,000. In the process one Bird Dog finds a motivated seller who wants to sell their property for $20,000. The Facilitator helps the bird dog figure out what areas to approach, how to connect with sellers, how to talk to sellers and then sends the Bird Dog out to start looking for properties and the Facilitator helps in the negotiation of the purchase contract. The Bird Dog then goes out and finds and end buyer who wants to purchase the home to live in for $50,000. The buyer is going to put $3,500 in down payment money and the remaining purchase price would be in the form of a seller financed mortgage for $46,500. Are you with me so far, house for sale for $20k to the Bird Dog who is then selling to Happy Family for $50,000. Happy Family has $3,500 to put down and are going to sign on seller financed note for $46,500. Sounds great so far, but where is the money coming from? That was my question. The Facilitator is going to be the one with the money. He is going to buy the mortgage note for a discount from the Bird Dog. What he pays will depend on what the Bird Dog is to get paid. So if the Bird Dog is to get paid $1000 and the Motivated seller wants $20,000, the title company is going to want about $1000 in fees and the Happy Family is bringing $3,500 to the table, then the Facilitator needs to bring $18,500 to the closing table to purchase the note and fund the deal. Motivated Seller wants: $20,000 Bird Dog gets paid: $ 1,000 Title Company Fees: $ 1,000 Total Needed: $22,000 Less Down Payment: $ 3,500 Cash from Facilitator: $18,500
Bird Dog Makes $1k 46,500
So at the end of the transaction: The Motivated Seller got paid $20,00 The Bird Dog Got Paid $1,000 Happy Family Got a New House for only $3,500 down And the Facilitator holds a $46,500 Note with only $18,500 into the deal.
Now, assuming everyone does their homework and paperwork correctly and the Happy Family Buyer is screened properly, this is a very profitable deal for everyone involved. But with a bit of work, it can be even more interesting. One option for this case study is for the Facilitator to do this deal directly from a Self Directed IRA Account and then the Facilitator’s SDIRA is receiving payments on the note instead of taking profit for his own use. In the workshop I attended, the Facilitator wants to offer the house at a price a bit under market, with an interest rate and amortization time frame that will allow the monthly principle, interest, taxes and insurance to be significantly LESS than what market rent is in the area. So if market rent is
$750 a month, then he wants the payment to be about $650. So it would cost the home buyer more to default on the loan and go rent the house across the street. On the opposite side of the coin, the low interest rate, keeps them in the seller financed note rather than refinancing to a traditional lender as their credit improves because their seller financed interest rate is not too much higher than what banks are offering. So what does this $46,500 note look like if we put some numbers to it? Remember the goal is to have principle, interest, taxes and insurance at less than monthly rent. So in this example the loan is amortized over 10 years or 120 months and the interest rate for Happy Family is 5%. This makes the P & I payment $493.20. Add $120.00 for taxes and insurance,
and their total payment is about $620. Now, this is where it really gets interesting. The Facilitator can sell the first 1/2 of the loan to another Investor who does not have the time or inclination to go out and do real estate deals, but who want to get better returns on their money that they are currently receiving from the bank or the stock market. In the scenario I saw, the Facilitator could sell the first 1/2 of the $46,500 note for $20,000. So if the Investor were to purchase the first 60 months of payments they would be scheduled to receive $29,592 in principle and interest payments. Then after 5 years the Facilitator gets the note back and the right to the last 60 months of $493.20 payments.
(Continued on page 26)
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d n a g n i d n i F r o f s s e c o r 8 Step P s l a e D r o f s r o t s e v n I g n i s Clo
el k s a H g i a r C By
Craig Haskell is author of, The Inside Game to Real Estate Value Investing, and founder of an investing site, ValueHound, that brings together a community of opportunistic and value minded real estate investors who are serious about learning new approaches to capitalizing on today's "Once in a lifetime" buying opportunity.
Did you find a great deal? If you can't factually support a great deal to your potential investors, then it will be hard to raise money. It's the most critical thing you need in your arsenal when approaching investors for money. With a great deal, using this 8-Step process will almost guarantee your fund raising success. Raising money is a process and it gets easier every time you do a deal because you are planting seeds with potential investors. Some investors may not invest in your first deal, but will invest on other deals. The best source of future equity is from your existing investors. Happy investors want to invest more, and the best part, they spread the word and bring in other investors. It's like a snowball going downhill; the longer it goes down the hill, the bigger the snowball gets. I want to help you start building your snowball. 8-Step Process to Finding and Closing Investors I have created an 8-Step process to raising equity for your great deals that will allow you to get your snowball rolling downhill. The most important thing to stay focused on when using this system is that raising money is a process not an event. You have to stay focused on working each and every step, as outlined below. is the 8-Step Process: 1. Develop a Pitch Book: Create a unique business plan and investment strategy to capitalize on today's great buying opportunity. What's your strategy to make money investing in real estate? Package your plan up in a short 6 – 8 page pitch book. 2. Develop a Potential Investor List: Make a list of poten-
tial people that may have an interest in investing in real estate. The best place to start is friends and family. This list outlines some of the best places to find investors for your list:
1. Business associates 2. Accountants who have clients who want to invest in
3. Financial planners 4. Attorneys who have clients who want to invest in real 5. 6. 7. Property owners who invest in real estate
estate Real estate agents know potential investors Insurance agents who have wealthy clients
This list will be your starting point. Make sure you ask people on your list if they know anyone else that might have an interest in investing in real estate. You'll be amazed at how many people will refer others. 3. Conduct Investor Meetings: Make breakfast or lunch meetings with people on your list. Review your pitch book during your meeting and determine if there is interest. During this meeting you are not selling anything, you are only finding out if an interest exits with your potential investor. The most important element coming out of these meetings is new relationships. 4. Build Investor Database: Potential investors who have an interest in your plan are added to your database. Your goal is to build as many potential new investors in your database. Stay in contact with potential investors in your database by sending them articles, stories, stats, and so forth relative to real estate investing and your business plan.
5. Investor Documentation: Investor documentation is created using professional assistance. Your attorney will prepare the legal documents required to approach potential investors. Don't skip this step because you are afraid to spend money. When you close on the deal, the legal fees will be paid from the partnership entity you created and raised money for. 6. Deal Fund Raising: Now that you have the proper documentation, you can approach potential investors in your database to raise money for the great deal you have uncovered. Why is it so important to find a great deal? Because potential investors will see the fantastic profit potential, taking much of the spot light off of you, the new sponsor. Also, having a great deal will get you excited, and that excitement, will show during your communication with potential investors. Investors who are not suitable for your deal must not be accepted. Carefully
review the investor documentation to make sure investors are qualified and have correctly completed the information. 7. Close the Deal: You are ready to close the deal using the funds you have raised from your investors. Investor funds should be deposited into the partnership entity. Once all the investor funds are deposited into the partnership account and ready for closing, the sponsor (you) will wire funds from the partnership account to the closing agent. When the deal closes, you should communicate to your investor that the deal closed. 8. Investor Management: Since one of the best sources of raising new equity is from exiting investors, managing and communicating with your investors is critical to your long term success. Make sure each investor gets your personal attention. They will become a great equity source for future deals.
If you find a great deal that you and your investors can get excited about and follow this 8-step process I've just outlined above, you will have much success raising money for your deals. Remember, raising money is a process not an event. Investing your time and money in the 8-step process will help you become a success at finding and closing investors for your deals. While I have only covered the surface on this 8-step process, you have the framework to put it into action. Start small and stay focused on the 8-steps. Make it a point to begin setting up you process today. It's never too early to begin, so get started now! Article Reprinted with permission from Craig Haskell and REIClub.com
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(Continued from page 7) Multi Family
(Continued from page 19) Resume
(Continued from page 21) Case Study
being purchased by investors for rent cater to different household types than investment-grade multifamily properties. Single-family rentals see households with children as their largest household type compared to investment-grade multifamily properties in which singles dominate, especially in urban locations. THE NEAR FUTURE Apartment fundamentals do not face a cliff, given the rise in new completions. Construction activity has been so depressed over the last two years that even new units coming on line only represent a return to recent average inventory growth rates. However, that does not mean that apartment vacancies will continue to crater more than 100 basis points per year, since current levels are already so tight. Reis projects vacancies to remain in the low 4 percentages through 2015, not much lower than its current 4.6 percent. Landlords recognize this, and have shifted their focus from improving occupancy to raising rents to meet revenue goals. There is a limit to how much landlords can raise rents as well, given that household income levels have remained relatively stagnant. But if GDP growth improves and the economic pie starts growing at a faster rate, apartment properties are poised to share in the benefits as well. As such, apartment investors are likely to do well in the foreseeable future. Certain transactions with going-in cap rates below 3 percent will encounter significant exit challenges if and when interest rates rise, but market participants with realistic expectations will find it difficult to pick a sector with prospects as sound as multifamily.
Victor Calanog is head of research and economics for New York-based research firm Reis. Reprinted from http://nreionline.com/distressedinventory/ multifamily_fundamentals_no_cliff_11132012/
firstname.lastname@example.org email@example.com www.efax.com With eFax you can receive your faxes anywhere you can check email, they are received just like email. You do not need to have a fax machine to receive eFax. In the event you want a paper copy of the fax you simply print one. This will save you money on paper and ink and allow you to only print the faxes you want. It will allow you to forward a fax onto someone else after you have reviewed it simply be sending an email. 800 Number Another nice tool is an 800 number. Although certainly not necessary, sometimes a plus to have. The defaulted notes may still have original mortgagors in place and often it will be necessary to contact them. As with any phone call made, contacting them on the first call is more than likely not to happen. An 800 number makes it easier for a debtor to return your call. www.800number.org www.instant1800.com
Or the Facilitator could borrow the $18,500 from the Investor and pay the Investor back over 5 years and offer the investor an 8% return for a monthly payment of $375.11 and
pocket the difference of $118.09 for the first five years and then have a free and clear investment for the last 60 months and then pocket $493.20 a month. Again remember the Facilitator can do this within a Self Directed IRA or outside of the IRA for income to live on. So why would the Investor buy a part of the note? Well in this scenario the Facilitator is a well respected investor in his market and known for offering rentals and seller financing and doing what he says he is going to do. He agrees to step in and deal with issues should the Happy Family Borrower default and assist with foreclosure and then renting or selling the house again for the Investor. The other important point to remember is that the Investor is more than likely someone who we know who is a bit older and has money in a retirement account earning a few percent in interest at the bank or maybe a bit more if they have it invested in conservative stock market investments who want to make a better return on their investment. Now some may say, but the Bird Dog found the deal and only got $1000. Fair enough, we could pay the Bird Dog a bit more. But for the most part, the Bird Dog is finding the deal and then the Facilitator is stepping in to assist with the contract and potentially bring the end buyer and all the money require to make the deal happen. It may also be able to bring in a second Bird Dog to find the buyer. Or the Bird Dog position could be taken by a Realtor who gets paid a commission for representing the motivated seller, the Facilitator or the Happy Family Buyer. Play with it and let me know what you think of this case study. Email me at Kim@GBIFuding.com
We hope you have found a few helpful tidbits in this article. They are vital tidbits for the Note Business. Eddie will be traveling to St Louis for an all day training presented by Street REIA. This is an excellent opportunity to reach a new facet of the real estate investing business.
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