RE N E W S

Magic Words
That Make Millions

investment

July / August 2013 Volume 1

Hard Money
Made Easy

2013 RE investment News

MAREI Members Enroll to receive a 2% semi-annual rebate on all qualifying pre-tax purchases. See your Member Benefits Section of the Member Library for Detailed Instructions.

We introduced our nationwide on site floor plan services At the National REIA Meeting in June Order Online at http://www.homedepotmeasures.com/realestate.html
Enhance your real estate marketing with custom floor plans from The Home Depot. Our floor plans can be used in website advertising, feature sheets, virtual tours and more! Schedule your personal measure visit online at www.homedepotmeasures.com/realestate. Create your account, enter the property information and choose a date. Our technicians come to your site and use handheld tablet computers to create your floor plan which is then emailed to you the following business day. No sign up, monthly or membership fees. NREIA associates also save $10 on every floor plan ordered by entering Promo Code NREIA14.

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RE investment News 2013

CONTENTS

cover story

28 MAGIC WORDS
That Make Millions
Investor Scripts to Put the Deals Together.

10 Show It, Don’t Tell It

How to use video to engage with your customers, members and prospects

22 Hard Money
Made Easy

2013 RE investment News

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CONTENTS
6

Rehab Workshop Follow the Money
Saturday July 27th

5 Real Estate Recovery Myths
8
July August 2013

Home Depot Rebate
Changes in Progress
PUBLISHER Kim Tucker

7

KCMO Water Department
& Landlords: an Update 14
ADVERTISING INFORMATION 913-815-0111 info@MAREInet.com

Vacancy Break-Ins
Ways to Deter Them

16

Pre-Screen Contractors
Get the Job Done

RE INVESTMENT NEWS IS PUBLISHED IN ASSOCIATION WITH MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORS

20

MAREI Wins Awards
For Third Year in a Row

P.O. Box 8685 Prairie Village, KS 66208 www.MAREInet.com 913-815-0111

34

Wholesale Real Estate
Getting Started Investing

DISCLAIMER

Regular Features
6

Coming in September Ron LeGrand & Jay Conner
Saturday September 28th

March Market Report
18 Member Benefits at a Glance 36 Invest in the KC Metro 38 Monthly Meetings & Dates

Mid-America Association of Real Estate of Investors and the RE Investment News 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. 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.

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RE investment News 2013

CONTENTS

Welcome to RE Investment News

To be successful in any new enterprise and real estate investing in particular, one needs to surround themselves with successful experienced people so you have the support network to help you through your learning and doing process. One of the many reasons to be a part of a larger group is to have more experienced people to draw upon when you need words of advice on where to find a house, how to analyze a deal, who to use for a contractor, how to sell a house and everything involved in a real estate investment deal. Members of MAREI are always willing to go the extra mile to help their fellow investor. Just this morning an email came into the MAREI office from one member, thanking 4 other members for their assistance in his

Shaun McCloskey and Jason Roberts teaching to a packed house at a recent MAREI Workshop on June 22nd.

very first rehab flip property. So when you need encouragement through your first or second transaction or maybe help on a problem deal, be sure to reach out to your fellow member, through the forums and social media, live, face -toface connections at meetings and networking events. Do not be afraid to ask for help. There is going to be someone within the group who has the answer or knows where to get the answer. It may be that you just need a word of advice and it may be that you are seeking out a partner for some aspect of the deal. And, when it comes time, remember to reciprocate and pay it forward to the next generation of investor.
2013 RE investment News 5

Market

April Real Estate Market Report
Sales Prices Up, Sales Up, Pending Sales Up
Kansas City Regional Association of REALTORS® reports that inventory is down and prices are up across the metro area. Sale Price: All counties except Platte experienced an increase in the average sale price of existing homes and new homes over last year. Existing Homes were up 11 % May over May and New homes were up 12% Home Sales: All counties experienced an increase in the total number of existing homes sold at 13 percent as well as new homes at 18 percent with an over all increase of 14 percent this May over 2012. Home Inventory: Existing home inventory is down by 12 percent and new homes are down by 9 percent with an overall decrease of 12 percent from May 2012. Pending Sales: Existing home pending contracts are up 8% over April 2012, New Homes up 35% and Overall they are up 11% over last year. Supply of Homes: Supply of homes is the calculated by dividing inventory by the 12 month average number of sales. A 5 to 6 months supply is a “balanced” market. Existing homes have a 5.6 month supply and new homes are at a 5 month supply with an over all 5.6 supply compared with a 7.2 supply this time last year. Read more about market data at www.KCRAR.com

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Read Full Article on Trulia: Digital Readers Click Here
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Real Estate
Recovery Myths
1. Recovering Too Fast: Markets do go up and down, overall not fast. 2. Investors are Driving Demand: They are, but were only about 20% of May Home Sales. 3. Sellers are stuck: Yes, now they can sell, but prices are higher too. 4. Rates are Through the Roof: They are up, but they are still low. 5. Foreclosures a Thing of the Past: The have slowed down, but not gone.

Advocacy Legislative Agendas

Get Involved

Corker-Warner Bill Introduced
On June 25th, Senators Bob Corker (R TN) and Mark Warner (D-VA) introduced legislation that, if passed, would have a direct impact on the real estate investment world.

ACT: When your local, state or federal governments are considering legislation that affects the real estate industry, MAREI calls on its members to act. Simply by contacting your local legislators, state representatives, and members of the Congress through an e-mail or a phone call. You can ensure that your business remains strong by getting involved and taking part. MAREI and REIA members nationwide join together and speak with one loud, powerful voice. VOTE: We ask that our members pay attention and educate yourself on the issues so when it comes time to vote that you make an informed decision and make your voice heard. INVEST: From time to time there will be issues that take more than the grass roots involvement. Times when a lobbyist or attorney needs to be hired to protect our interest. At those times we will ask all members to donate funds and efforts to protect our industry. GET INVOLVED: Ready to take part? Be sure to notify MAREI of important issues in your local city or here in our local States. We do not have a full time lobbyist on staff so it is up to our members to notify us of issues. At the Federal Level we monitor issues through the National Association of Realtors and National REIA to keep you informed.

The bill is supposed to replace government-sponsored enterprises Fannie Mae and Freddie Mac with a privately capitalized system that preserves market liquidity and protects taxpayers from future economic downturns according the website of Senator Corker. 2013 President of the National Association of Realtors states that NAR “supports replacing Fannie Mae and Freddie Mac with a non-shareholder owned authority or authorities. In our vide (NAR), the new entity should be subject to tighter regulations on product, revenue generation and usage and retained portfolio practices in a way that ensures the mission of the GSEs continues to meet the needs of consumers while protecting taxpayers. Moreover, it should be managed in such a way as to encourage private capital’s participation in the secondary mortgage market.” We urge all in the Investor community to be aware of potential legislative changes in our industry.
Read More MAREInet.com/Corker-Warner

“The man who gets the most satisfactory results is not always the man with the most brilliant single mind, but rather the man who can best coordinate the brains and talents of his associates.”
- William Jones

“Avoid becoming overwhelmed into inaction. Try to break every issue into ‘bite-size” pieces.”
- Sanjyot P. Denung

2013 RE investment News

7

MAREI Members Enroll to receive a 2% semi-annual rebate on all qualifying pre-tax purchases. See your Member Benefits Section of the Member Library for Detailed Instructions.

Home Depot Rebate Program Changes in Progress
counting software from faded cash register receipts. Records can also be accessed any time, anywhere. The Pro Rewards Account also allows you to save more on purchase of paints, primers and exterior stains from top brands like Kilz, Behr and Glidden. Spend $2,000 minimum, and save 10%, Spend $4,000 and save 15%, spend $7,500 and save 20%. The member should keep in mind that one of the upgrades to the system is the ability to use the new Home Depot Estimator online tool. This new tool is accessed from the dashboard once registration is complete and allows the member to shop online, get estimates, and place the order which will be pulled from the inventory of their preferred store and will be packaged and waiting for them when they arrive for pickup. With any major change, there is inevitably going to be a few hick-ups. All Members are encouraged to access the registration guide in the MAREI member Library listed under member resources to find how to log in and where to call to confirm their accounts have been moved successfully or to merge the newly created Pro Rewards Account with any old existing accounts that may have had previously. Once the merging of the new system has been worked

The Home Depot is excited to announce that they have gotten the green light to merge the Customer Recognition Program (CPR) System that manages the 2% Rebate Program for members of National REIA with the Home Depot Pro Rewards Program. As Home Depot serves many segments of the real estate industry with the CPR programs and Pro Rewards programs it made sense for them to consolidate the programs to better accommodate their customers. Integrating their systems allows them to bring more functionality to the users and to provide higher quality customer service. By merging to the Pro-Rewards Programs Members will still be able to add credit, debit and checking accounts plus gift cards. When a member shops at the Home Depot with one of their registered accounts, they receive a 2% Rebate for all purchases. They have also implemented a new key tag program for members who prefer to pay cash. Members can log into their account and review all sales and track purchases and review transactions made within the past 2 years and have electronic receipts emailed or stored within your account which resolves the problems with entering sales in your ac-

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RE investment News 2013

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Member Benefits

out, members of MAREI should expect to see the new mobile applications and investor ecosystems being created around the Home Depot’s new mobile application RenoWalk. RenoWalk is an iPad based mobile renovation task identification, materials and labor specification, quotation and ordering system. This basic engine is being licensed and lent to partners to embed in their investor support programs. Some of the features of this new tool from the Home Depot include: 1. Allows the Investor manage Home Depot’s benefits for National REIA members and keep track of the most used stores. 2. A portfolio of individual properties can be built with property address, location and delivery preferences. 3. Allowing the investor to build a library of frequently used products from the Home Depot Database and local store inventory, allowing the investor easy access to the items they purchase on a regular basis. 4. Allows the investor to take extensive photos to create a portfolio by property to create an audit trail of before and after photos, tagged by date and to further detail where and what is contained in the photographs. 5. Investor can use built in tools to take room measurements and calculate amounts of materials needed to help in the estimation process and property analysis.

6. Once the investor has photoand other business support services MAREI Members to receive a graphed, measured and selected that Enroll are made possible by applications all items needed full order can running on devices like the 2% a semi -annual rebate onmobile all qualifying then be sent to the pro desk at the iPad. pre-tax purchases. See your Member favorite store to for a bulk pricing In the mean time, be sure to log into Benefits Section quote to save the investor money. of the Member Library your Pro-Rewards account and acfor Detailed Instructions. Look for RenoWalk in to be rolled out cess the Home Depot Estimator. in 2013, to provide the member with accelerated ordering, online inventory (thus minimizing wasted THD store trips), convenience, pricing benefits

2013 RE investment News

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RE investment News 2013 10 10 RE investment News 2013

Marketing
If you haven’t started experimenting with online video, now might be the time. You don’t need a fancy production crew or a big budget, either. You just need a good story and a smartphone or digital camera.

Show It Don’t Tell It
How to use video to engage with your customers, members, and prospects
Insight provided by Constant Contact KnowHow Do you like to watch videos? Who doesn’t?! Visible Measures’ Q2 2012 Social Video Advertising Report found that almost 900 million people watched video online in the second quarter of 2012, making it the second largest quarter for online video ever . That’s a 45% jump from Q2 2011 and a jump of nearly 75% from Q2 2010. People aren’t just watching the latest viral videos, they’re also watching clips from their favorite businesses and organizat ions. If you haven’t started experimenting with online video, now might be the time. You don’t need a fancy production crew or a bi g budget, either. You just need a good story and a smartphone or digital camera. In this guide, we’ll share with you why your business or organization should be leveraging online video in your marketing eff orts, give you a few ideas for getting started, and provide a few tips for shooting a quality video without breaking the bank Why Use Video Video engages people in a way that photos and text alone can’t. For small business owners and nonprofit managers, using video in your marketing can bring faces, voices, personality, and heart to your operation, while also demonstrating your authentici ty. To top that, on sites like Facebook, video posts generate 100% more engagement than text -only posts. If that kind of engagement isn’t enough to convince you, here are five more reasons to add video to your marketing mix. 1. Tell your story quickly. People don’t have a lot of time, so you want to get your message across quickly. Video can communicate a lot of information i n a

Get Social
MAREI South Meeting Tuesday August 6th 6pm to 9pm With Paige Cahill From ConstantContact.com

Check out our Seminars at www.ConstantContactSeminars.com Educate, Empower, & Engage! Paige Cahill Regional Development Director KS, MO, & NE E: pcahill@constantcontact.com Phone: 913.428.9007

2013 2013RE REinvestment investmentNews News 11 11

Marketing

short amount of time. Inexpensive software tools such as Apple iMovie or Windows Live Movie Maker can be used to easily edit your video, add titles, music, and get it ready for uploading to a video hosting site. 2. Put a face to your business or organization. A video helps bring your business or organization to life, and it makes your communications more personal. Putting people on camera makes you and your team real to your customers and members. 3. Get your readers to remember your message. Let’s face it: In general, we remember little of what we read. Our retention of a message is much better (estimates are three times better) when it includes pictures, sound, and motion. Your readers can only take action if they remember what you said. 4. People enjoy video. People like to read, but they really like video. We watch TV, go to the movies, stream video content to our computers and mobile phones, and more. 5. Videos are easy and inexpensive to create. The great myth is that video is hard and expensive to create. Yes, the ads you see during the Super Bowl cost a lot, but you don’t have to spend much to get good video. If you already have a smartphone, laptop, or tablet—you likely already have a camera that can create high quality

video. If you want to take things a step further, video cameras like the Kodak Z18 are available for around $450 and are capable of shooting videos in HD. Plus, it’s free to host video on sites such as YouTube, Blip.tv, and Vimeo, making your videos easily accessible, easily shared through social media, and easily embeded on web sites and in blog posts. Not only that, videos hosted on these sites can help your search engine optimization (SEO) efforts as they give sites like Google and Bing yet another piece of content associated with your brand to crawl and serve up to the masses. Video Ideas for One and All As with any type of marketing content, it may be difficult to think of video topics that apply to your business or organization. But there are plenty of simple ideas out there that can help jump-start your video efforts. Among them: 1. Thank your customers for their business or your volunteers for their support. Film yourself or a few of your staff members giving their well wishes, and stitch the clips together as fun way to say “thanks” to all those who support your business or organization. 2. Feature a customer raving about your company, product, or service. Catch people when they’re happy: getting ready to leave your restaurant after a great meal, just taking their first bites of that ice cream cone, or if they stop by to express their happiness with your service. 3. Share a cool company milestone. For

example, when Constant Contact’s logo went up on our building, we filmed it. Any time your organization celebrates an achievement, film the celebration and put snippets up to share with your customers and members. 4. Announce a fundraiser or special event. Let people know what you’re doing and why they would want to be involved. NYC nonprofit, Pajama Program used video to show people the difference their involvement can make. 5. Ask for feedback from your subscribers. Each week, we shoot a video interview where we answer questions we receive from readers on our blog or attendees at our marketing webinars. We post the “Ask an Expert” interview to our blog and encourage viewers to share their questions, as well. 6. Share your expertise or provide tips for using your products. • A mechanic could show what he looks for when examining various parts for wear • Sales folks can demonstrate how their products work together • Any business can introduce a new website and its features 7. Put the spotlight on your team to highlight your weird or wacky culture. 8. Review a book that your members or customers may enjoy. 9. Share highlights from a past year’s event to promote an upcoming gathering. 10. Have your staff wish customers and

Customer Spotlight:

Video Works for Fourword Marketing

As an author and speaker, and the owner of Fourword Marketing in Toronto, video has become an effective way forMarc Gordon to market himself and his company in a way that he believes cannot be accomplished with words alone.“The impact of video is far beyond what you can do in a written blog,” Marc explains. “You can present things on so many different levels and illustrate examples in settings that people can visually understand, which can be challenging to do in a written blog.” Since March 2010, Marc has produced MarcTV, a bi-weekly sixminute program that covers topics ranging from how to create a killer press release to good business networking practices. Marc shoots the videos in his “studio” — i.e., his office when in his native Canada. Once posted to his Vimeo account and embedded in a blog post, Marc promotes the videos across multiple channels, including his Constant Contact–based email list and social media sites like Twitter and Facebook.

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Marketing

members a happy holidays. Your video content doesn’t even have to be 30 frames-per-second of moving pictures. You could also: Use Images with voiceover. Pictures or images are a great way to communicate. If you like, you can easily use what is known as voiceover on an image. This combines a narrative that you can record over the image. String a set of these together to tell your story. • Your pictures: Using any camera, take pictures of your building, product, people, etc.  Images: There are lots of places on the web to get images, either for free or for a relatively small investment. A few examples include Google Images, iStockphoto,Flickr, and stock.xchng.

There are many software tools that enable you to take an image and add a voiceover. Examples are Microsoft’s PowerPoint (10.0 or greater), Apple’s Keynote, TechSmith’s Camtasia, and iMovie. 4 Tips for Shooting Quality Video It doesn’t take thousands of dollars in gear to make a great video, but paying attention to a few details will make your final product that much better: 1. Whenever possible, use a tripod. Keeping the camera steady will make for better picture quality when you upload your video to a service like YouTube. Plus, your viewers won’t get seasick while watching. 2. Film in a quiet area. This is particularly important if the only mic you have is the one built-in to the camera as those tend to pick up all the ambient noise as well as the speaker. In these cases, the less ambient noise, the

better. 3. Bright light is good. Cameras have come a long way when it comes to the ability to record in low light, but the more light you can provide, the better the video quality. When filming,

Note: As with any media, be careful you’re abiding by copyright law. Create a Screencast. Capturing a demonstration of your product or a walkthrough of your business or organization using your website is another way to create engaging video. Screencast software runs on your computer and captures what takes place on the screen. You can also record your voice speaking at the same time or add music. The combination makes for an informative and engaging experience.

have the subject facing the main source of light, not in front it: 4. Orientation is key. When shooting on an iPhone, Android, or other video-capable smartphone, make sure to hold the device in a landscape (horizontal) mode and not vertically. Holding it vertically makes for a messy editing process as you crop the video to fit a standard size video window.

Marc uses a single camera and a wireless microphone for each shoot. When on location, Marc has a colleague shoot the video, but in the office, a tripod acts as the lone cameraman. Editing is done with Apple’s iMovie software. “A lot of people put in a lot of transitions and effects,” says Marc, who does all the editing himself. “You don’t need that. It’s all about simple, clean transitions that keep the video nice and clean. Let the content be the draw.” For Marc, the message is important, but humor is a key aspect of his video effort. For instance, in a Halloween episode, Marc went shopping dressed as Wonder Woman. He also likes to use edgier titles on his videos to draw attention to certain clips — a tactic that seems to be working: Views of his videos have grown steadily and his email list has grown 29% since he started MarcTV. “My initial goal was use MarcTV as a marketing tool to promote myself as an expert and personality,” Marc says. “But the popularity of the show has really given it a life of its own. People from all kinds of industries are now reaching out to me as a result of the videos.”

2013 RE investment News

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For Landlords

Vacancy Break-Ins
Ways to Deter Them
From MR Landlord.com

Tips are shared by regular contributors to the popular MrLandlord.com Q&A forum, and by real estate authors. To receive a free sample of Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at LandlordingAdvice.com, where you can ask landlording questions and seek the advice of other rental owners 24 hours a day.

Install Motion lights, fake security signs, and a hundred dollar camera system from Amazon. One of the handyman who does work for me (been with me for 10+ years) is willing to stay in my empty units during rehab. I just provide him with a bed, a TV, and a few other things. Perhaps you can find a similar person. Talk to several of the neighbors, adults who have lived there awhile, know the area and have a good idea of what's going on. Keep it well locked, and rotate the lighting. Put an (extra) car in the driveway. Get yourself 2 radios. Dial them into the same talk radio channel and put one at the front door and one at the back. Go to Goodwill and find 2 pairs of size 14" or bigger work boots. Put a pair outside on each porch with a couple of spent shotgun shells. We use a portable monitored alarm system from Lasershield that uses an integrated cell phone. They run a few hundred and $25 a month. One of the speakers on the CDs from the recent MrLandlord.com Convention suggested installing an alarm system, even if it isn't monitored, and then pretend to adjust it and set the alarm off several times when neighbors are around. His reasoning was that most break-ins are perpetrated by locals

and "announcing" the presence of the alarm system reduces the likelihood they'll target that property.

Put curtains and blinds then install a couple of lights on timers so the house looks as someone lives in. Be sure all newspapers are picked up as the house would be like someone is living there. I have lights on timers. A radio playing. Blinds so no one can look in. In bad areas with vacant properties I have a under carpet switch or on a door a motion sensor wired to a 150 db alarm inside the house that cause a normal person to go deaf -- they run away and neighbors call the police and me. I place large dog food bowls, dog house in back, few PBR empties for decoration, maybe a bottle for cigarette butts at the vacant rental. I purchased a game cam which is a camera and motion detector. I set it to take pictures of the AC unit and / or driveway. So far I have not been hit when it was installed. It lets me see the people who have been in the yard. It moves house to house without a monthly charge. Mostly keep the place from looking abandoned. Cut the grass, keep it clean and nice, porch lights on, blinds and lights inside, etc.

  

14 RE RE investment News 2013 14 investment News 2013

Industry Services

Houses & Notes

WANTED
Don’t Toss another Seller Lead for Lack of Buyers! Let Us Review Your Lead . . . Assign to us or partner with us. kcmoHomeBuyer.com 816-200-2198
 Rehab & Retail  Turn Key Rental  Fixer Uppers  Multi Family  Non-MLS Call Don or Scott 816-200-2198

2013 RE investment News

15

Contractor’s Corner

How to Pre-Screen
Contractors & Get The Job Done
Robyn Thompson Many real estate investors shy away form the ugly house business because they fear hiring contractors. We have all heard the horror stories of rehabber who looser their shirt because a contractor took them to the cleaners. I am here to tell you that contractors can be your worst enemy or you best friend, depending if you hire a good one or a bad one. So how can the beginning novice real estate investor make the correct choice – the hard working team player that gets the job done on time, on budget and at a high standard of quality? The answer is by following all eight of the critical prescreening steps below. 1. Ask the contractor you are interviewing, how long they have been in the business. I prefer at least five years of experience in the trade. I want a contractor who has seen and repaired every strange, odd and crazy thing that could be wrong with a house. Experienced contractors know how to estimate all tough projects and experienced professionals can give an accurate price to fix any problem. Inexperienced contractors, on the other hand, underestimate repairs to get the business, and then they try to push their mistake on the home owner by upping the price half way through construction. The investor needs to say NO. No is the most powerful word in the dictionary, and a rehabber needs to use this tool. If they did not have the knowledge to make a good estimate, it is their problem not yours. 2. Ask for three references from the last three major projects that the contractor has recently completed. Once you receive the reference letters, make sure you call to certify the reference and the quality of the workmanship performed. The quality of work should be satisfactory to the homeowner and should have been completed in a timely manner. If any of the reference don’t check out, do not hire this contractor. If they gave you false information upfront, you know they can not be trusted. Move on to the NEXT quote. 3. Ask for a copy of the contractor’s license (if required in your state) and for a copy of their workman’s comp insurance. Once you receive a copy of their license, make sure to check that they are not suspended. Also check to
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Industry Services
see if any complaints have been filed against the contractor with the Better Business Bureau. It is absolutely mandatory that a contractor prove that he or she has workman’s comp for all the employees that will be working on the job site, before they start renovations. Why is this so important? Well, if one of the workers has an accident, you do not want to be sued as a potential employer. 4. Make the contractor pull all necessary permits required by your local building department. The homeowner should NEVER pull the permits. The contractor should also be responsible to pass all necessary inspections required throughout the construction process so a certificate of occupancy (CO) can be obtained when construction is complete. 5. The real estate investor should make it mandatory for all contractors to buy all necessary materials to do all necessary material to do the renovations. They investor should never waste their valuable time buying materials. If the investor buys the materials, the workers could be viewed as the home owner’s employees per the IRS guidelines. You do not want this. 6. The real estate investor should always demand a six month to one year warranty of all parts, labor, workmanship and material provided by the contractor. This warranty should be in writing. WARNING: If a contractor will not provide a warranty and stand behind the quality of his or her workmanship – DO NOT hire them! 7. Real estate investors should never agree to pay any contractor by the hour. You pay a fixed price for the complete job. Never pay the final payment in your independent contractor agreement until the project is 100% complete. 8. Ask for financial references (ex: where the contractor purchases materials). I will contact the supply houses to make sure the contractor is not behind on paying for materials because I do not want to give the contractor a check to payoff an old bill and they have no money for the materials they need to buy for my job. The last words of advice that I can give to anyone beginning a renovation project is to make sure everyone agreement with a contractor is detailed in writing with an independent contractor agreement. A detailed list of materials required should be listed in comprehensive scope of work. The document should have work completion time frames, penalty clauses for finishing late, require all permits be pulled and inspections complete before final payments are released.

2013 RE investment News

17

MAREI’S MEMBER BENEFITS PROGRAM

AT-A-GLANCE
USE THIS PAGE AS A GUIDE TO VALUE ADDED DISCOUNTS TOOLS AND SAVINGS CREATED JUST FOR YOU ON GOODS AND SERVICES YOU USE EVERY DAY.

YOUR MEMBER BENEFITS

Landlord Services

Suppliers

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.

Investment News
The award winning newsletter for Mid America 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.

Office Solutions Marketing

Save on select FedEx Office copy and print services up to 20% and on FedEx Shipping up to 22%.

Websites for investors, landlords, and other services. FREE trial.

Free issues of both magazines available at the monthly meetings of MAREI.

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.

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RE investment News 2013

Other Discounts

Member Service

We have several services as part of our website to help you grow your business.

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.

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.

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.

VISIT
The Local Market Monitor tracks real estate sales and economic trends nation wide. Offering 25% Discount for Members. The Member Library is packed and ever growing with pdf versions of entire books, EBooks, Articles, Forms, and Documents. www.MAREInet.com Look under Resources & Members Only

2013 RE investment News

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Marketing

For the Third Year

MAREI Wins

Awards
For three years running, MidAmerica Association of Real Estate Investors has returned from the National REIA Mid-Year Conference with Honors of Merritt Awards from the Awards of Excellence Challenge. Each year members of National REIA submit their best efforts in many different categories including: Government Affairs, Community Service, Membership Development, Print Communications, Electronic Communications, Education, Convention and Trade Show and Finance. In 2011 MAREI received awards in the areas of Electronic Communications and Membership Development. In 2012 MAREI received awards in Electronic Communications, Finance, Government Affairs and Print Communications. This year in 2013, the awards were in the categories of
  

Convention and Trade Show for the joint venture partnership with Realty411 in the Kansas City Real Estate Expo held in April. Membership Development for the addition of a 2nd monthly meeting being held in the North Kansas City area. Print Communications for the current version of the RE News, the newsletter for Mid -America Association of Real Estate Investors.

Kim Tucker, MAREI’s Executive director shared “Mid-America Association of Real Estate Investors strives to be the best because they have the best members who give back to their fellow members and the community. MAREI would like to thank all of their members for their continued support through out the years that has made their continued success and the honor of these awards possible. Without our Members we would be just another club in Kansas City.”

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Industry Services

Insurance for Vacant Properties Rehab Properties Renter Insurance for Your Tenants Business Insurance Umbrella Liability Health Insurance Life Insurance

www.MOFB.com Stephanie Cunliff 816-781-4370

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REHAB FUNDING

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Hard Money Made

. . . Easy
From eBook from Merrill Kaliser, Esq. & Michael Hoffman Esq.
What is a Hard Money Loan? Okay. You have heard (or maybe not) of the terms “Hard Money Lender” or “Hard Money Loan”. What is a Hard Money Lender? What is a Hard Money Loan? Why is it “hard”? What does all of this mean? Is there easy money out there? Ironically, “Hard Money” is the easiest money to find and borrow. This book will walk you through the step-by-step analysis a Hard Money Lender uses when deciding to issue a Hard Money Loan. First, a Hard Money Loan (“HML”) has been defined as “a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate.” (Wikipedia). How is that any different from the financing provided to you on the house you live in, your homestead? Presumably, your home is not in distressed condition and is not as much of a risk (if you ignore the last three years) to the banks. HMLs are typically issued at much higher interest rates than conventional loans and are primarily based on the future value of the house rather than the current value of the distressed house. This is asset based lending. Because the house is distressed, the value (in the conventional lender’s mind) is more difficult to calculate and the loan is perceived to be more speculative and higher risk. A HML is generally based on the after-repair value (“ARV”) of the house in contrast to the actual value (“AV”) of the house. A conventional loan is typically based on the AV which is quite simply defined as the value of the house “as is” at the time the loan is made either using the contract price or an appraisal of comparable houses. The ARV, on the other hand, is calculated based on the value of the house after the estimated repairs are made on the property. This ARV is usually determined by an appraiser who searches for comparables of similarly distressed properties that have been rehabbed and sold in the same neighborhood within the last 3 to 6 months. We will discuss the calculation of ARV later. As you can see in Exhibit 1 (next page), there is a huge difference in the amount a conventional lender will loan on a house versus that of a Hard Money Lender, assuming that the conventional lender would even entertain a loan on a distressed house.

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REHAB FUNDING

In Exhibit 1, our buyer finds a distressed home that is listed for $50,000 and in need of approximately $20,000 of repair work. After the anticipated repairs are made, the house should be worth $100,000 (ARV). Assuming that a conventional lender would loan on this distressed investment property, they would most likely lend based on the actual purchase price. With the typical conventional lenders, 70% - 75% loan to value formula, the investor would only receive financing of $35,000 (70% of contract price) vs. $70,000 (70% of ARV) from the typical Hard Money Lender. Remember, to complete the house and sell it at comparable market value the investor needs approximately $70,000 (acquisition plus rehab). Yes, you are correct, the investor will come out-of-pocket approximately $35,000 for the deal in order to avoid higher interest and higher fees. We will discuss later, in detail, what those higher interest rates and fees are and how they affect the investor’s out-of-pocket expenses and profit. Why do we have Hard Money Lenders? Now that we know the basic difference between a HML and a conventional loan, we need to know who the hard money lenders are. You probably already figured out that a conventional loan is issued by a conventional lender, and a HML is issued by a ….. Hard Money Lender. What is a Hard Money Lender A Hard Money Lender can be an

individual, a self-directed IRA, a group of individuals, a corporation, a limited liability company, a business…the list goes on and on. None of these are regulated depository institutions, except for the selfdirect IRA which is subject to its own set of rules and regulations. In reality, a Hard Money Lender is anyone or any entity that is willing to loan money based on a distressed house having a higher ARV in 3 to 6 months. To simplify, a Hard Money Lender is lending on the future value of the house. Higher risk yields higher returns in the mind of a Hard Money Lender. The novice investor may think a Hard Money Loan has greater risk; however, we will dispel this notion. This book, along with our courses, forms and due diligence checklist will show you how to minimize risks and capture higher returns. Wow!! You should be nervous! We are telling you that a federally insured bank will lend money to a startup company with no real property as collateral (knowing approximately 2 in 10 startup companies fail in their first year); however, it will not lend on a house that has a value (or future value) of at least 30% more than the loan amount. Additionally, the HML will be personally guaranteed by the borrower (i.e., a “recourse” loan). That’s right, generally, conventional lenders will not lend on distressed houses. That is one of the most important reasons why we have Hard Money Lenders. Another reason Hard Money Lend-

ers exist, and in our opinion the most important reason, is the investor/borrower. The investor/borrower wants to pick up that distressed property, rehab it and either flip it or rent it. The investor/borrower has contracted to acquire the house at a discounted price, creating a large equity spread between cost and ARV. This equity spread encourages investors to seek out Hard Money Lenders for funding instead of tying up significant amounts of their own money in one property or using their own selfdirected IRA as funding. This is called “OPM”. OPM is a very technical term for “other people’s money.” Many real estate investors have significant amounts of cash and other resources, yet they still choose to use OPM. By using OPM, you keep your cash for other investments, emergencies, college education for your children, etc., in exchange for paying a higher interest rate and additional fees. OPM is another way of saying I am using someone else’s money to finance my investment property. Let’s recap:

We have told you that it is extremely difficult to find a conventional lender that will loan on distressed properties

We have told you that if you actually find a conventional lender willing to loan, the loan will most likely be based on the actual value.

We also mentioned that there are higher fees and interest

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REHAB FUNDING
rates associated with Hard Money Loans. However, we haven’t discussed what HML fees are and how they affect your return on investment (“ROI”). Are the interest rates really that high, and fees really excessive? Yes. This book is written by brutally honest Hard Money Lenders. Facts are facts, and we will share with you the average fees and expenses3 associated with a HML versus a conventional loan, and why smart investors still choose hard money. We will not discuss using your own cash instead of financing because if you were interested in that you wouldn’t be reading this book. However, a brief point on using your own cash – OPPORTUNITY COST/LOSS. If you tie up $70,000 of your own cash in a single house, you have decreased three fold your potential returns. You could have leveraged that $70,000 on several houses by using OPM. Exhibit 2 is an example of the difference between a conventional loan and a HML on a buy, rehab and flip investment. In this example, our investor is buying a home for $50,000 and needs to put $20,0003 into the house to be able to sell it for $100,000. We show the basic fees and expenses associated with each type of loan based on averages. For clarification purposes, closing costs are points, fees and other expenses. A “point” is simply a percentage of the loan amount (i.e., 1 point on $70,000 is equal to $700). In our example, the investor could qualify6 for $70,000 in financing by using a Hard Money Lender (70% of ARV) vs. $35,000 (70% of the acquisition price) with a conventional lender (if they are willing to lend on this house). One lender will lend $70,000 and the other will lend $35,000. Without taking into consideration points, fees and interest, the investor using the conventional lender will be out-of-pocket $35,000 in order to rehab the house.

Exhibit 2

In this example, we assume the house will be rehabbed and sold within six months. Remember, the interest rates are annual interest rates. If our investor is holding the property for six months, the interest paid on the loan amount is cut in half (3.25% vs. 7%). In our example, the interest rate for the HML is a little more than double the conventional rate, but the amount of the loan is twice as high. The points and fees typically charged by Hard Money Lenders are 4 points and $1,000 in administration fees. There may also be an appraisal fee, inspection fee and survey fee. We have rounded the points and fees to 8% of the loan amount. If you add the interest payments, closing costs and out-ofpocket cost for rehab, you are left with the “Total Out-of-Pocket” cost. The Hard Money Loan is less than onethird of the conventional loan when looking at total cash out-of-pocket for

the investor. The closing costs are typically 10%; 6% commission to the agent plus seller’s concessions and title fees and costs. The bottom line is the return on investment. This is the investors report card. In this example, our investor’s return on investment is almost 2 times greater using a hard money loan. They benefit by using 1/3 of the amount of cash that would be needed for a conventional loan. Let’s recap.

The investor/borrower can make twice as much profit on every dollar she puts into the subject property using a Hard Money Loan. Our Investor used about 1/3 of her cash to buy and flip a house by utilizing a Hard Money Lender. Our Investor could have purchased three homes (assuming same
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REHAB FUNDING
costs and expenses) and would still use less cash than an investor purchasing just one house with conventional funds, with a return of $28,500 (3 times $9,500) on approximately $31,500 in total out-ofpocket. That’s right, the investor can use $6,000 less to make $10,500 more in profit on essentially the same cash. In the example above, we have presumed that the borrower/investor is buying, rehabbing and flipping the property. Below is an example of the conventional loan versus a Hard Money Loan in the buy, rehab and rent scenario. In Exhibit 3, we demonstrate the costs and expenses associated with a conventional loan on AV and a HML on ARV. The example assumes that the conventional loan on AV will be refinanced in six months on ARV and (a big “and”) the borrower receives a “cash out” of up to 70% of the ARV less the original loan amount (i.e., $35,000). Given these assumptions, at the end of the six month period our investor would be out-of-pocket about $8,500 less than if they went to the Hard Money Lender. Remember, that is at the end of 6 months. If our investor/borrower did not have $35,000+ in cash to pay for their rehab and remaining acquisition costs, they would only be able to do the HML. Another way, from the investor/borrower’s standpoint is to tie up $37,000 in the property for six months with a conventional loan, while our investor/borrower who chose to go with the Hard Money Lender only tied up $10,500. If other great opportunities on distressed properties occurred during that time frame, the investor/borrower that went with the conventional lender would have missed opportunities unless they had an additional $35,000+ to put down on each deal.

ter the option period (if one even exists). There are few, if any, conventional lenders that can do this. Not every Hard Money Lender has the ability to close a transaction in 3 – 5 days; however, our company can and we know a few of our competitors can as well. This ability gives our investor/borrower leverage with the seller. If the seller is aware that our investor/borrower is pre -approved with a reputable Hard MonFinally, while we have provided finan- ey Lender and can close in 3 – 5 days, cial and leverage scenarios to demon- the likelihood of obtaining a lower acquisition price on the subject house is strate why smart investor/borrowers choose Hard Money Lenders over con- much greater. The lower the price, the greater the potential equity for our inventional lenders; another reason is vestor/borrower and the collateral for time. The time it takes to get lender the Hard Money Lender. approval and actually loan money to our investors/borrowers to acquire a home will make or break a deal. Many We cannot stress enough that the like- times, the only leverage that an inlihood of finding a conventional lender vestor/borrower has when making an to lend on distressed houses is practi- offer to a seller is the promise of closing the transaction within 3-5 days afcally nil. Further, the likelihood of a

conventional lender allowing a refinance on the investment property in six months without a pre-payment penalty may be slim, as is finding another conventional lender that will allow you a “cash-out”. If our investor/borrower is able to find conventional lenders that can facilitate these transactions, they should use them and send us their contact information so that we can use them as well!

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RE investment News 2013

Where:
Career Education Systems, Training Room Top Floor Ward Parkway 8600 Ward Parkway, Kansas City, Missouri

When:
Saturday July 27th, check in is at 8:30 workshop from 9 to Noon

From:
Mid-America Association of Real Estate Investors and Longhorn III Investments

How Much:
Members of MAREI the cost is $30 Non-Members the cost is $45

BONUS PRICING Today Only with this Registration Form Members Only $15 Non-Members Only $20

Pricing: □ Members $30

□ Non– Members $45

See www.MAREInet.com/Workshop for Early Bird Pricing Through July 20th
________________________________________ Attendee ________________________________________ Attendee 2 ________________________________________ Address ______________________________________ Phone ____________________________________ Email ____________________________________ Email 2 ______________________________________ City State Zip ______________________________ Credit Card #

Scan & Email to info@MAREInet.com / Fax to 201 -574-2969 / More Info: www.MAREInet.com/Workshop 2013 RE investment News 27

COVER

Success Strategies

I've got a collection of magic words I've accumulated over the years. Most are designed to help me get into or out of a real estate deal. All of them work.

MAGIC Words
That Make Millions
I've just finished reading (for the second time) a book called Magic Words That Bring You Riches, authored by my good friend Ted Nicholas, a member of our Board of Directors. Ted has sold over 200 million dollars worth of information products worldwide by direct marketing. Over the years he put together a collection of Magic Words to get people to do things they ordinarily wouldn't do. In Magic Words, Ted discusses how to do such things as get the best table in a restaurant and first class seats on airplanes. He talks about how to slash the cost of a room at first class hotels and attract all the money you need for any business venture. Want to approach a member of the opposite sex and immediately gain interest? How about renting a Mercedes for the price of a Ford or buying jewelry at below wholesale prices? Ted can tell you how to attract the best employees to make your business prosper, as well as how to get capable people to work for free. He even discusses ways to gain financial interests in other people's companies without investing one red cent. Pretty cool stuff, huh? And that's just the first few chapters. This book is also a masterful direct marketing bible covering every aspect of the business by a consummate professional. Like I said, I read it twice. Then it hit me! Like Ted, I've got a collection of magic words I've accumulated over the years. Most are designed to help me get into or out of a real estate deal. All of them work. The words you are about to read have made me millions of dollars and, if used properly, could do the same for you. The truth is, students have been trying to get me to do this for years, but it was Ted Nicholas book that pulled the trigger. Incidentally, this one issue of the Mentor could easily justify your cost for the next ten years. Okay, here goes. Here's a set of magic words you should know by now and use daily: "If I pay you all cash and close quickly, what's the least you would accept?? and that's always followed by: "Is that the best you can do?"
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COVER STORY

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Success Strategies

Ron LeGrand shares the Maximum Allowable Formula for purchasing investment properties with students at a recent training event.

If you're not using these words to get to the bottom line quickly, you're making a mistake, not to mention wasting valuable time. These words cut to the chase and save you a lot of time otherwise spent beating around the bush. Of course, if you're naming the price you'll pay before you ask what the seller wants, I'll have to take you out behind the woodshed . . . Ye who speak first have big mouth & will pay handsome price for house. Those words aren't exactly magic, but they speak the truth nonetheless. Never, never name the price you'll pay or the down payment or monthly payment you'll pay or accept when selling. Okay, lets say you've asked 'Is that the best you can do,' and the seller says yes. A good follow-up line that works for me is . . "So you're saying if I don't give you $_____, you won't sell the house?" Now if the answer is still yes, you won't be buying today unless you're willing to change the focus to a terms deal rather than a price deal. A good icebreaker to use when you want to make it clear that you're not happy with the number you've been quoted is . . . 'What's your second choice?' I usually chuckle or use a hint of humor when I ask this.

It's better than simply saying I won't pay the asking price. Let's say you're trying to get a seller to name the asking price and they won't. You know better than to pressure them, but you just can't get them to break. Try this . . . "How about a dollar?" This will get through to them and probably produce an answer. If so, you're back in the screening process and you know where you stand. If not, you can come back with . . . "I simply have too many prospects to work with to waste time on those I can't buy. If you'll tell me what you're asking, I'll know quickly if we can do business. Is that fair?" By this time, they're usually in or out. You can't buy houses from uncooperative sellers. By the way, did you notice some powerful magic words hidden in there? Take note of how I tend to answer a question with a question. 'Is that fair?' turned my response into a question and put the responsibility to answer back on the seller. It also softened the blow and made me seem more warm and fuzzy. 'Is that fair?' is a powerful set of magic words that should become a part of your everyday vocabulary with almost everything you negotiate. Let's say you're pre-screening a seller who has a house with a mortgage balance. First, you want to know what's owed on the property or you can't possibly determine whether it's a deal or not. These aren't magic words, but

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Success Strategies
are critical ones: "I will lease your house with the right to buy it for the loan balance "What do you owe on the house?" when I purchase. I'll guarantee your What if they say it's none of your busi- payment and maintenance until the ness? You say . . . loan is paid off and the house is out of your life. How does that "I buy ____ houses per year and sound?" use many different methods. I'm probably the most serious buyer Notice how all the benefits come beyou've talked to yet. However, I'll fore the question. The seller has need the facts to be able to present enough information to encourage a you with an intelligent offer. Will positive response. Isn't that better this be a problem for you?" than will you lease/option your home Again, a question in an answers cloth- to me?? Another good question that will ease the seller's mind and make ing. Did I not sock it to them on that you seem genuine is . . . one? finding out that you don't exactly know what you're doing. First, don't sweat it. You don't have to appear to be an expert. You can try to fake it, but if you're confronting an intelligent seller, many times they'll see through you and try to ask you embarrassing questions. So if you're asked if you've ever done this before, use these words . . . "Well actually, no. This is my first deal after graduating from some rather intense training. I was hoping you'd help me do it right, OK?"

Asking for help brings you down to the seller's skill level and you've built trust by answering truthfully. Don't worry "If it doesn't work for both of us, Frankly, anyone who won't give you about the seller expecting you to be then we don't want to do it, do we?" the facts is not ready to sell yet. You an expert. If you seem sincere and got your answer . . . move on. You That makes it pretty clear that you're excited, you'll usually get the deal. In can't make un-motivated sellers moti- not desperate to make the deal. Anfact, being too smart or seeming too vated. other version is . . . confidant will often turn off more peoNow you have your answer. You know "If this will cause you to lose sleep ple than if you appear to be a novice. the loan balance. Now it's time to find at night, I'd rather not do it. Is it go- They'll think you're too green to cheat out where you're headed with this ing to be a problem?" them. deal, so ask . . Here's a good one to break a staleNow let's say you're talking to a seller "Will you sell the house for what mate and get you back in negotiation about carrying a mortgage and the you owe on it?" as well as collect more facts that subject of interest comes up. Your might lead to different offers . . . goal is zero interest, so you shouldn't Those magic words can make you be the one to initiate conversation on $500,000 per year if you ask them on "If you and I can't do business tothis topic. If the seller doesn't mention all your deals. With just those twelve day, what will you do with the interest, you shouldn't, either. little words, you'll instantly know house?" whether you'll be getting a free house This also gets the seller thinking, par- When presenting an installment offer, by taking over the debt or an almostticularly about all the ugly answers to the magic words are . . . free house with debt plus a little cash that question. Their answer may be, "I'll pay $____ per month until thrown in. Of course, you may also 'I'll put it on the market or list with a you're paid in full." learn that the seller wants full price Realtor until it sells.' Your response . . and is not flexible. Again, you found Of course, this means you've divided . out what you needed to know with the loan amount by the monthly princitwelve words. Now you know whether "And what if it doesn't sell?" pal payment you want to pay, excludto proceed with the deal or move on. ing interest. If the seller comes back At least you'll get a feel for whether with ?what interest rate is that?? Your Now let's say you can't get a deed be- this seller is worthy of your follow-up response is . . . cause of the due on sale clause or the list. I hope you know by now that . . . seller won't trust you with their credit. "All seller's minds will change with But you see opportunity there and a time and circumstance" lease /option makes sense. Here's the Here's one you'll love if you're a beopening line to present the offer . . . ginner and worried about the seller "Why do you need interest?" Then if you get more argument and it becomes a sticking issue, you could respond by saying . . .

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"What's more important, your inter- easier to simply use the whole script est or getting the house sold now?" because these words are all magic. I can't tell you how many hundreds, If that doesn't get the job done, say . . maybe thousands of buyers (idiots) I . talked to before I developed the words "If I give you interest, how much and the order in which I use them. can we lower the price?" Here we go . . Or . . ."Will you sell to me with no down payment?" Or . . ."Would you wait six months (or a year) for your first payment?" Or . . ."Would you take 25% off the balance I owe you if I agree to pay you off within _____ years?" Of course, these same tactics can be used if the seller is asking you to raise your offer. You'll notice it all comes down to some very powerful magic words that can be adapted to many uses (If I . . . , Would you . . .). How about when you're raising private money and approaching potential lenders? Here's my icebreaker that hasn't changed one whit in 16 years . "Do you have an IRA or any other investment capital that's not getting you a 15% return safely?" "Do you want to buy or rent?" If the answer is rent and you want to sell, the rest is worthless conversation. But before giving up, use one more line . . . "If I can show you how to buy and get you financed, would you rather own than rent?" If yes, continue. If no, save your breath. Next . . . "Have you ever tried to buy before?" "Yes." "What stopped you?" This lets you know immediately what you're dealing with. "Is your credit good, fair or poor?" sell or trade to me?" "Can you repair houses or have other skills to earn more?" "Are you willing to rob a bank to raise cash?" Oops! Got a little carried away on that last question. It might not be appropriate. Now let's assume you see someone you can work with and you want them to get excited and realize that you are their solution to home ownership. Here are the words that will glue them to you . . . "If you can convince me you want the house and make a commitment to buy, I'll get you financed one way or another. Even if I have to be the bank. If I can't get you in a home of your own, no one in this city can." These words have sold a lot of real estate for me. They really make an impact on your buyer's level of hope. Follow them up with assurance that you are easy to work with and very flexible and the prospect will be putty in your hands.

Don't ask how's your credit.' Some These magic words will get you all the people are ashamed to tell you it's money you need assuming you ask at ugly and will simply lie. Give them a multiple-choice question so they know "We can do whatever you and I least some people who have money agree. I own the house and I'll do you won't be shocked if they have to invest. what it takes if you will. Is that poor credit. If it's bad . . . Now let's look at the selling side and fair?" "What's on it a bank wouldn't like?" discuss a few choice words I use to Well that ought to be enough magic to find good buyers. When wholesaling, I This breaks the ice and gets the cuskeep you practicing awhile. Of course, want to know my buyer will come to tomer to open up. these words aren't really magical until closing with the money and isn't simpyou begin to actually use them and ly trying to jerk my chain. In this case, Now the big question . . . make them work. the magic words are . . . "How much money can you raise for a down payment?" "When do you want to close?" Whatever the answer . . . If they need more than ten days, they're a time waster and I'm at risk. If "Can you get any more?" they say "ASAP", I know they're seri"Can you borrow from relatives?" ous. "Do you have credit cards?" There are so many magic words to use when pre-screening buyers, it's
32 RE investment News 2013

"Do you have something you could

Coming to Kansas City in September: Ron LeGrand
Ron LeGrand is a nationally renowned real estate expert and lecturer who has taught thousands of people how to make big incomes without using personal capital or credit. LeGrand’s philosophy is “The less I do, the more I make”. It’s not about working hard; it’s about working smart - doing things that allow you to get wealthy quickly and not doing the things that consume your days swapping hours for dollars. LeGrand started out as a simple auto mechanic with a redneck background who barely got out of high school. He borrowed money 30 years ago to attend his first real estate seminar. Since then he has personally bought more than 2,000 homes, and continues to do so. Today he owns or controls several hundred million dollars in real estate developments and owns several businesses. Affectionately known as the “Godfather”, he is recognized as the nation’s leading authority on buying and selling single family homes for fast cash with no credit and little or no personal investment or risk. His unique approach has made him an in-demand author, trainer, lecturer and consultant. More than 250,000 people have attended one of his workshops and he has aptly been named the “Millionaire Maker”.

Jay Connor
Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging over $50,000 per deal - with little to no risk. “Jay is a real estate magician” as “He works seemingly magical deals for buyers and sellers alike.” When Jay was introduced to the world of Private Lending he said “PRIVATE LENDING ROCKED MY WORLD AND MY REAL ESTATE INVESTING CAREER!” His first Private Lender gave him $250,000 in Private Money. Then, within less than 90 Days, Jay raised $2,150,000.00 in Private Money. Jay has been a full-time Real-Estate Entrepreneur for 10 years in a population of only 40,000 while producing a seven figure net income per year. He is a National Best Selling Author with his new book: “The Masters of Real Estate: Getting Deals Done in the New Economy.” For the past 4 years, he has been mentoring Real Estate Investing Students across the U.S. and Canada . Since he started raising Private Money, he has developed new, easy and simple techniques for raising all the money you’ll ever want for your real estate deals. Jay pours his talents and energies into numerous activities. He is President of Conner Properties and EZ Mortgages, plus former CEO of Leader Homes, and past President of Business Networking International. In 1997 Jay formed Encore Music, a private record label, where he records original piano compositions. When: Saturday September 28th 9:00 AM - 4:00 PM (8:30 AM Registration) Where: To Be Determined Cost: Members $29 Non-Members $59

Details being worked out Please Watch MAREI Calendar And Your Email for Details
2013 RE investment News 33

Wholesale

Wholesale Real Estate
Building Your Buyer’s List
Kim Tucker “I want to get into this real estate investing. Where should I start?”
This is a question that I often receive and while many factors should go into where you personally start like time and money, I quite often recommend getting your start in this business by learning how to wholesale properties. It does not take a bunch of money to wholesale a house and all the tasks needed in wholesaling should be learned in just about any other type of residential real estate investing.

In May’s Investment News we had a broad overview of Wholesale Real Estate Investing, that is an essential component of any type of real estate investing. If you can master the art of finding deals, evaluating properties, solving problems for sellers, finding buyers, and selling the deal - the key steps in Wholesaling, then you are ready to take on most real estate transactions. Today we are going to talk about Building Your Buyers List. This is the second step in wholesaling real estate because before you spend all the time, money and effort of finding motivated sellers and properties to wholesale, you want to make sure you are finding what the buyers want. So first, you have to find the buyers. There are many different ways to find buyers and how you go about it will depend on your goals. If your goal is to have the biggest list of buyers names then you could go out and buy a list, give away free reports, collect business cards at REIA events and do anything and everything you can to collect a name and an email address. But remember, an email address does not buy properties from you over and over again. It may be that one person on that list might buy a bunch, but the rest are just time spent collecting the names and working the system. Case in point, as an investor for the past 13 years I have collected every name and email from every investor I have ever came in contact with and faithfully put then in my database and had a follow up system to keep in touch. I have a list of well over 6000 names. When I have a wholesale house to sell, invariably I sell it to one or two people on that list and usually the same one or two people. So size of list is not my goal, rather a quality list of people who buy houses is my goal. So where do I personally start in building my buyers list, with people who I know that buy houses.

My family and I have been investing in real estate since 2000 and we have an established list here in Kansas City. But recently we have expanded to non-performing notes across the country and I have found myself with a house I need to sell in a market where I don’t know anyone. So I have had to build a buyers list, FAST in 3 markets in the past year. So think about your market and who buys houses, typically all cash and fast? Other Real Estate Investors. Who does it over and over again . . . Landlords and Rehab Investors. Where can you find Landlords and Rehab Investors? Let me tell you my little secret to finding these types of people . . . www.SocialServe.com. This is a site that covers most markets across the nation where landlord investors can list their homes for rent on Section 8. This site is searchable by county and zip code. So when I go into a new area, I do a search of all the properties for rent in the particular area where I want a list of buyers and then screen for just houses or privately owned properties and look at who is offering the homes for rent. I get a name and a phone number and about 50% of the time, I get an email address as well. Personally I just grab those folks with emails, as I have a property to blast out. I am probably missing out on two or three very good buyers that don’t have email. I should take one more step and call all the owners listed and ask if they buy houses, what they buy and the best way to reach them and add that information to my database. My next place I look for buyers is Craigslist and not by posting an ad, but rather by looking at all the ads on Craigslist that appear to be a real estate investor or landlord. Again take the time to personally call all of these people and ask them the pertinent questions about where they buy, what they buy and the best way to reach them and add this information into your database.

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RE investment News 2013

Wholesale
The next place I look for Cash Buyers is the local Recorder of Deeds office. I personally subscribe to a service that contacts my local Recorder of Deeds to research out a list of people who have purchased a single family property in the past 60, 90, 180 days or what ever I want and paid all cash. It eliminates corporate buyers that appear to be a banking institution and then I have an excel spreadsheet of names and addresses to mail out a postcard. You can get the same data for free if you want to do a little legwork at your own county recorders office. Now you can do a lot with this list. Personally when I have a property for sale is when I put together a postcard and mail it out to the list. I tell them about the house and direct them to my website to collect photos. If you listen to the gurus, you should have some sort of free report on the site so you can capture a name and email when you give away the report. But as I am looking for buyers, not a huge list of names, I just send out the house and my catch is that if they go to my website they will get full interior photos of the property. Real Buyers will go to my site and I only have to interact with real buyers who want to buy my houses. You can also go to live events and network which is an excellent way to build a list. Or consider hosting a table at a local REIA group to collect names and email addresses and buying criteria. Now before you get yourself all caught up in a huge pile of contacts you can’t possibly deal with, be sure to invest in some sort of database management system that will allow you to deal with all these names, emails, phone numbers and buying criteria. Here in our office we have used outlook, Top Producer, Act and we are currently using RealFlow. We really like the functionality of Real Flow as it will allow us to give away a free report for an email if we choose. We can enter contact information and buying criteria. The best feature by far is the fact that it will keep track of who buys what type of house and where and when we have a new property we put into the system, it goes out and does an instant search for us and gives us a list of only buyers who are looking for properties that are in the same city, size, style and price as the property we are currently dealing with. Then we can send that one property out to 12 buyers and make 12 follow up phone calls. We really like to use this tool BEFORE we write a contract on a property so we have a cash buyer in place immediately. And should we find ourselves the proud owner of a killer deal, well we can always blast it out to all 5000 plus names to find a cash buyer fast if the select list of matched buyers do not buy. So build your list and find out what they want, so you can go to the next step of Implementing a Marketing Plan to find houses that fit your buyers needs.

Cash Buyers

WANTED
Get on the Short List
For Non MLS Properties
   

Rehab and Retail Houses Turn Key Rental Properties Fixer Uppers & Multi Family Off Market

We are sourcing properties that are not on MLS and selling them fast to a Select Group of Preferred Cash (and financed) Buyers in the KC Metro. KCInvest.com 816-523-4400 Call and speak with Don or Scott or Submit Through Website

2013 RE investment News

35

Properties

Invest in KC Metro
MAREInet.com/ Properties
11212 E 25th Street Independence, MO $60,000 4 bed 2b Bath
All Brick Duplex in Independence

Scott Tucker Realty Resource 913-523-4400 stucker319@gmail.com Christoph Becker Blueprint Properties Inc 816–419–1165 info@blueprintprop.com

8034 Euclid Ave Kansas City, MO 64132

$15,500

2 Bed 1 Bath

Fixer-Upper Investment Property Near Rent Ready

5252 Brookwood Ave Kansas City, MO 64130

$19,500

3 Bed 1 Bath

Solid 3 bdrm in Christoph Becker Brookwood Subdivision Blueprint Properties Inc 816–419–1165 info@blueprintprop.com Fixer Upper Rehabber Special Christoph Becker Blueprint Properties Inc 816–419–1165 info@blueprintprop.com Scott Tucker Realty Resource 913-523-4400 stucker319@gmail.com Christoph Becker Blueprint Properties Inc 816–419–1165 info@blueprintprop.com Kim Tucker KCInvest 816-523-4400 www.kcinvest.com Christoph Becker Blueprint Properties Inc 816–419–1165 info@blueprintprop.com Christoph Becker Blueprint Properties, Inc BlueprintPropertySoltions.com (816) 419-1165

3717 Indiana Ave Kansas City, MO 64127
11215 Crystal Ave Kansas City, MO 64134

$16,500

3 Bed 1.5 Bath

$45000

4 Bed 1 Bath 2 Bed 1 Bath

This house is a home owners Dream!
This home needs some Love. Cheap Fixer Upper!

$10,000 2214 E 58th St. Kansas City, Mo 64130

10106 Canbridge Ave. Kansas City, MO 64134

$49000

3 Bed 1.5 Bath

Turn Key Money maker in south KC!

$35,000
3824 Bellefontaine Kansas City, MO 64130

3 Bed 1 Bath

Property is currently occupied and cash flowing with a market tenant $750 a month. Market Renter is lined up for this property paying $750 a month.

$35,000
3342 Bales Ave Kansas City, MO 64130

3 Bed 1.5 Bath

36 36 RE investment News 2013 RE investment News 2013

MAREI
Mid-America Association of Real Estate Investors

Member Digital Library
Members can Learn about a Wealth of Real Estate Topics Through the MAREI website

Forms & Documents: log in to the member library to access all kinds of forms, sales and rental contracts to use in your real estate business Special Reports: MAREI as been collecting E-Books for 10 years and adding all of them with real educational content to the library. Digital Books: We have a small but growing archive of books that have been converted to PDF for you to read on your reader or print out. Audio & Video: Members also have access to 100s of hours of training through pre-recoreded webinars and teleconferences saved in the Member Library. All hosted on Google Drive. Benefit included in all Membership Plans - Join Today!

 

2013 RE investment News 2013 RE investment News 37 37

Events

Monthly Meetings
There’s not a better investment in yourself that you could make!
At our monthly meetings we host guest speakers, panels and roundtable discussions with industry experts providing insightful and current information for attendees. MAREI meetings are an essential tool for building a comprehensive team for real estate professionals. MAREI works to keep its members up -to-date with the latest information on the real estate industry. MAREI has built relationships with members and the community at large who provide our members with information they need to be successful in today’s world. We are the place to go for the information you need from the novice to the experienced Real Estate Investor. Monthly meetings are the best place to connect and build relationships with like -minded people and learn a thing or two along the way.

MAREI MEMBERSHIP MEETINGS HELD AT: Northland
(1st Thursday of the Month) North Kansas City Community Center 1999 Iron Street North Kansas City, MO (816) 300-0433 MAREInet.com/KCNorth

Southland
(2nd Tuesday of the Month) Career Education Systems/ In Mall 8600 Ward Parkway, Ste 2080 Kansas City, MO (816) 444-7277 MAREInet.com/KCSouth
More Education & Networking Opportunities MAREInet.com/Calendar

Upcoming D ates
August 1st Meeting: Online Security: We maintain so much personal and financial data on our computers,
laptops, smart phones and the internet, we need to take steps to protect it, find out how . Northland

August 6th Meeting: Why Social, we all have small businesses to promote, we all need customers, find out
how to use Online Social Networking to grow your business. Southland

September 5th Meeting: Northland Meeting - Topic to be Determined September 10th Meeting: Southland Meeting - Topic to be Determined

Name: ______________________________ Date: _______________________________ Email: _______________________________ Source: ______________________________ For first time guest to visit meeting.

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RE investment News 2013

Guest Pass is available for first time attendees to MAREI. If you have attended before, explore membership options or pay guest fee.

MAREI

Mid-America Association of Real Estate Investors

GUEST PASS
A Real Estate Community

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.

Color Services
Find out about our color design services for properties and read about the latest color trends.

Flooring Products & tion

Installa-

Wide variety of name brands, 24-hour turnaround and reliable installation.

Your Closest Floor Covering Store
14531 W 101st Ter , Lenexa, KS 66215-1144

Commercial Wallpaper

FLOORCOVERING PRODUCTS:
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.

HomeScapes®
Enhance curb appeal and make selection easier with pre-selected exterior color schemes.

Sherwin-Williams is your one-stop source for commercial wall covering. Over 5,000 residential and commercial wallpaper collections available.

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 www.Sherwin-Williams.com .

EXCLUSIVE MEMBER DISCOUNT
Investment News Page 5
2013 RE investment News 39

I n c r e a s e Yo u r P r o f i t a b i l i t y

Join Mid-America Association of Real Estate Investors
Members receive a complimentary e-subscription to RE Investment News. Become a Part of a Local, State and National Network that Supports YOUR Industry!
MAREI MEMBERSHIP AUTOMATICALLY GIVES YOU NATIONAL REIA MEMBERSHIP MAREI is the local Chapter of National Real Estate Investors Association (National REIA), a federation of local associations through out the United States representing 40,000 members across the U.S. LEGISLATIVE MONITORING & ADVOCACY MAREI monitors and promotes the enactment and enforcement of local, state and federal laws and regulations beneficial to the real estate industry. Support and create local and national advocacy initiatives and grass roots mobilization. EDUCATIONAL SEMINAR AND COURSES MAREI offers all National REIA Programs locally.  Professional Housing Provider Designation  National REIA University MAREI also offers local training events  2 Monthly Meetings a Month  Weekend Workshops and Full Day Seminars  Partnering with National Education Events locally and across the country. MAREI WEBSITE MAREI maintains a website that includes our event calendar, service provider list, government affairs updates, articles of interest and member properties for sale. All members are able to interact through our website with member forums. MAREI SOCIAL MEDIA MAREI maintains active social media spaces on Facebook, LinkedIn and Google+ for the benefit of members to interact with each other and the public at large. Build your circle of influence by interacting on our social media pages.
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NETWORKING & BUSINESS BUILDING MAREI holds a variety of events that enable members to interact with other industry professionals, develop contact and gain knowledge that helps them grow their business. MAREI’s calendar also includes a variety of events held by members and outside groups that are open to the general public. NATIONAL REIA BENEFITS INCLUDE  National Cruise: Network and learn about new techniques on the National REIA annual cruise.  Industry Resources: Brining member benefits to the national buying power of our local associations. “I went to the MAREI meeting and was very impressed with the quality of people I met, as well as the content that was presented. Thank you for putting that on, and I look forward to next month’s meeting!” Joe McDonald, Real Estate Investor “The main reason for joining was to meet with other Real Estate Investors in the Kansas City area. Not only have we done that but we have also received access to services from other MAREI members, among them rehab insurance and a general contractor.” Tami and Kerry Hardinger, RE Investors “I can’t afford to let my membership expire! It pays for itself. I think you have really done a good thing creating MAREI. It is a very important tool.” Scott Shore, Real Estate Investor / Contractor

www.MAREInet.com RE investment News 2013

www.NationalREIA.com

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