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Newsletter of Mid-America Association of Real Estate Investors
LEGISLATION: HR 1728
As you already know, a bill has passed Congress that will effectively end creative finance as we know it. The Senate will hear this potential law any day now and we need MASSIVE ACTION from the real estate investors all over the US to stop it. The part of the bill that has concerns for the real estate investor: Section 101, 3, (E) does not include, with respect to a residential mortgage loan, a person, estate or trust that provides mortgage financing for the sale of 1 property in any 36 month period, provided that such loan: (i) Is fully amortizing (ii) Is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay (iii) Has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and life-time limitations on interest rate increases, and meets any other criteria the Federal banking agencies may subscribe. This bill as it is written now and has passed the House would effectively keep you from:
the time to listen to a recording of this call at: Playback #: (712) 432-1011 Playback Access Code: 426189100# —————— A few scenarios from Vena in her article: IMAGINE this: you find and buy an investment property for $50,000. A potential buyer contacts you and wants to buy it for $70,000, but has no down payment, or can’t get bank financing for whatever reason. You like the person and know she will be a great homeowner, so you owner finance the house for her.
Did you make a “reasonable” (what ever that means) determination as to her ability to repay? Is your loan “fully” amortizing over 30 years? Did you give the buyer full disclosure under federal Truth-in-Lending laws?
If not you may have violated federal law. And these are just a few of the new, tough, lending standards trying to be imposed on YOU!. Now we can get around the law by limiting the number of homes we sell through seller financing to one house with some sort of creative seller financing every 3 years. If you use seller carry back, contract for deed, or lease to own more than once every 3 years, then you will need to comply. We also need to be concerned even if we don’t do these types of transactions. Why? Think of the millions of Americans who have recently been through foreclosure or foreclosures in the past few years and have no other way to buy a property other than some sort of owner finance. Think of all the homes that we as investors buy and then resell in this manner, no one will be buying and prices will be further depressed. Then think of the millions of properties that don’t qualify for a mortgage not because they are bad properties but because of where they are located (yes red lining is still alive and well in many locals), or the low price of the home (not many lenders want to make a $20,000 to $30,000 mort(Continued on page 14)
Selling properties with owner-carryback or wraparound mortgages Selling properties using land contractor or contracts for deed. Selling properties using lease / option And possibly, borrowing private money to buy properties.
To this end Vena Jones-Cox in conjunction with National REIA held a short conference call on June 11th to let investors know what this law is and what to do about it. If you have not heard the details on this law, please take
Mid-America Association Of Real Estate Investors
Mid-America Association of Real Estate Investors (MAREI) is one of the largest real estate investor associations in the mid-west. MAREI members consist of full and part-time investors, beginning investors, real estate brokers and agents, attorneys, contractors, accountants, property managers, renovation specialists, appraisers, bankers - people who want to enjoy the many benefits of real estate investing. MAREI was established in 2003 and promotes networking and educational opportunities to its membership. MAREI services members in Kansas, Missouri and Nebraska.
INVESTMENT NEWS © 2009 by Mid-America Association of Real Estate Investors (MAREI), a Real Estate Trade Association. Published monthly by MAREI and included as benefit for our members. Quotations and reprints are permitted with full credit given to author, plus “The Investment News: Newsletter of Mid-America Association of Real Estate Investors.” Subscriptions are $59 per year or are included with membership. MEMBERSHIP Twelve month individual membership is $99, 2 Person Membership is $149. Guest Fee is $25. Articles must be received by the 1st of the month one months prior to issue date to be considered for publication. To be considered for a specific issue, it is recommended you contact the Editor at least two months prior to issue date. All submissions are at the discretion of the editor and are subject to editing. Advertising space deadline is the 1st of the month one month prior to publication. All camera-ready artwork and materials for non-camera ready ads are due by that date. Please see www.MAREInet.com for more information.
CODE OF ETHICS MAREI members are expected to be civic minded and willing to operate with high standards of honesty and integrity. It is our duty to conduct ourselves with the highest principles of the free enterprise system. We strive for MAREI to be synonymous with competence and fairness. As MAREI members, we hereby bind ourselves to this code of ethics: 1. 2. 3. 4. 5. We shall not discriminate against any person with regard to race, color, religion, age, national origin, sex, handicap or familial status as defined by current Kansas, Missouri, or Nebraska law. We shall recognize that real estate is a service related industry. We shall refrain from engaging in any illegal practices, or defrauding any member, customer, or association, with the aim of always conducting business in a professional manner. We shall endeavor to stay informed and updated on matters affecting housing in our communities, and adhere to local, state and federal laws. We are individually responsible for our own due diligence and continuing education. Members are expected to verify any and all assumptions regarding business decisions to prevent falling victim to fraud, misrepresentations and illegal practices.
To provide education, discussion and networking opportunities to help real estate entrepreneurs & investors reach their financial goals using sound, honest business practices.
All members of Mid-America Association of Real Estate Investors and guests must wear a name badge to all General Meetings. There will be no exceptions.
Further, if any allegations of conduct considered detrimental to the purposes and interest of MAREI are received in written and signed communication to the management, we will consider the matter. Should a decision to take further action be made, a furnished copy of said allegation (s) to the accused, who shall be given adequate time to reply. Thereafter, management shall take such further action as it may deem property and in accordance to this code of ethics.
Mid-America Association of Real Estate Investors PO BOX 8685 Prairie Village, KS 66208 Phone: 816-523-4400 Fax: 816-523-4448 www.MAREInet.com Info@MAREInet.com
The information contained herein is believed to be accurate; however, it is not guaranteed or warranted in any manner and is subject to change without notice. Writers’ and speakers’ opinions are not necessarily those of MAREI. You are advised to seek professional advice.
Mid-America Association of Real Estate Investors is a Member of the National Real Estate Investors Association
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Explanation of Important Commercial Real Estate Investment Analysis Terms
by Karen Hanover These terms are important for you to understand as they are the ones most commonly used by the professionals with whom you will be working. This is not intended to be a glossary, but an explanation of the terms through an example. Net Operating Income (NOI) The Net Operating Income (NOI) of a property is calculated by determining the property’s first year Gross Operating Income and then subtracting the Operating Expenses for the first year. Gross Operating Income - Operating Expenses = Net Operating Income The Gross Operating Income of property is the total income a property can expect to receive from all sources over a one year period. The Operating Expenses are the expenditures needed to keep the property operating during the same period. (See the article Cash Flow Model for a more thorough explanation. Sample Calculation: $500,000 Gross Operating Income - $300,000 Operating Expenses = $200,000 Net Operating Income The NOI of a property comes directly from the operations of a property and disregards mortgage payments or other additional expenditures the property owner may make, such as tenant improvements or leasing commissions. Capitalization Rate (Cap Rate) Many investors start their financial analysis of a property by calculating the NOI in order to be able to calculate a Capitalization Rate (Cap Rate) according to the following formula: Net Operating Income ÷ Property Price = Cap Rate The Cap Rate is expressed as a percentage rate. Cap Rate is typically calculated based on the first year of operations of the property and an all cash purchase of the property. Sample Calculation: $200,000 Net Operating Income ÷ $2,000,000 Property Price = 10% A Cap Rate can be looked at as a first year return to the investor comparing how much the investor would receive from operations with the price that would be paid in an all cash purchase of the property. It is a measure of performance the investor can look at to compare how their money is working for them in one property compared to another property or investment. Many institutional investors purchase their properties for all cash, not using any financing. For them, the Cap Rate is a valuable method of comparing properties. Individual investors often use financing and it may be more appropriate for them to use additional methods of comparing first year returns. Cash On Cash Many investors who use financing to acquire properties use the Cash on Cash method to compare first year performance of competing properties. Cash on Cash takes into consideration the fact that the investor does not have to have all cash to purchase the property, but also will not keep all of the NOI because they must make their mortgage payments from their NOI. First, the investor must determine the amount they must invest to purchase the property or their Initial Investment. Total Purchase Price Plus Costs - Amount Financed = Initial Investment Sample Calculation: $2,050,000 Price + Costs Less $1,550,000 Loan Equals $500,000 Initial Investment Next, the investor must determine the first year Cash Flow from operations, including the payments due on the financing. Net Operating Income - Payments on Financing = Cash Flow Sample Calculation: $200,000 Net Operating Income Less $140,000 Payments Equals $60,000 Cash Flow With the calculation of the Cash Flow and the Initial Investment, the investor can make another comparison of how their money performs in this property compared to other properties. By calculating Cash on Cash the investor can calculate a first year percentage return on their investment in the property.
(Continued on page 14)
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General Meeting ~ ~ 6pm Networking ~ 7:30 pm Presentation ~ Marriott, Overland Park MAREI Presents:
Commercial Real Estate Investing
An Introduction with Charles Connely IV, CCIM
Join us as Charles Connely, IV, CCIM, gives us a general overview of the different types of commercial real estate investment available and their corresponding tenants. Find out what are the management responsibilities of apartments, retail, office, industrial, triple net (NNN) properties, medical properties, mobile home parks, etc. What you need to know for financing, buying, and holding commercial real estate investing. As this is an introductory presentation, you should also consider classes through the Lewis White Real Estate Center at the Block School of Business & Public Administration at UMKC as well as an introductory course through the CCIM Institute. Charles C (Chuck) Connely, IV, CCIM is the President of C.C. Connely & Associates. His company specializes in new commercial real estate development opportunities, financings, sales/ disposition of properties, strategic planning, mergers & acquisitions of businesses and business valuations. Commercial developments include manufacturing, warehouse/distribution, retail, office, municipal and entertainment properties. Chuck is an Adjunct Professor in real estate in the Lewis White Real Estate Center at the University of Missouri Kansas City Block School. He is the Treasurer of the CCIM Institure and on the Board of Directors. Q & A: with Walt, KC Business Journal Lewis White Real Estate Center The Big Deals Regional Outlook Buyer Beware CCIM’s Ready Resources Charles Connely Bio CCIM Institute New Products Market Trends Back to Basics Networking Know-How
Sponsored by Home Depot
MAREI has teamed up with The Home Depot to offer all of its members a Material Purchase Rebate Incentive Program. This program is available to all MAREI members and offers unbeatable Volume Pricing. This amazing benefit is designed to offer real estate investors and contractors the lowest possible price on job lot quantities. In addition they are offering a Biannual rebate of 2% of your net sales for your purchase at The Home Depot. For more information be sure to see the 7:15 presentation, the using your MAREI membership, access our online library at www.MAREInet.com and look for Home Depot under benefits in the library.
Tuesday July 14th, 2009 Overland Park Marriott 6:00 pm Check in & Networking 6:00 pm New Member Orientation 6:00 pm Vendor Hall 7:15 pm Sponsor Presentation 7:30 pm Guest Speaker Sponsor Meeting: $200 Reserve Networking Table: $35 for Member’s
10800 Metcalf Members Attend FREE $25 Guest fee at Door Preregister for $15 on Web Site More info www.MAREInet.com
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Lender Ratings & Classifications of Apartments
Lenders have developed general classifications of apartment buildings so that they can communicate amongst themselves and other members of the industry with some level of uniformity. The classifications are Class A, Class B, Class C, and Class D. 1. Class A Newer, Institutional Grade 2. Class B Older, Institutional Grade 2. Class B & Class C properties are purchased for cash flow 3. Class C Older, Declining Area 4. Class D Older, Declining Area, Poor Condition Class A Apartments Institutional buyers like new, larger apartments in prime locations because of low deferred maintenance. These properties are typically occupied by white collar workers and have amenities such as garages, in-unit washer/dryers, pools, spas, exercise gyms, the latest technology, etc. They are typically between 1-10 years old. Typically they are in the path of progress and as of this writing (July 2008) can be bought at cap rates of 7%. They will likely have less cash flow than properties with higher cap rates but will have greater appreciation potential. Class B Apartments Class B buildings are in good areas with many of the same amenities as Class A properties, but Class B buildings are 1020 years old and occupied by both white and blue collar workers. Class B properties are often owned by investment groups, such as limited partnerships and limited liability companies. As of this writing (July 2008) they can typically be bought at cap rates of 8% - 9%. These properties will have decent cash flow and decent appreciation potential. Class C Apartments These apartments are older properties built within the last 21-30 years in working class areas typically occupied by blue collar workers and even some Section 8 tenants (please see my article on Section 8). The properties may be in declining areas but not necessarily dangerous areas. The units in Class C buildings are smaller than those in Class A and B buildings and the projects have fewer amenities. The occupancy rates are typically higher than Class A 0r B because they are more affordable. Individuals usually own Class C properties, which as of this writing (July 2008) can be bought at cap rates of 10%. These properties will have decent cash flow but little opportunity for appreciation. Class D Apartments These buildings are older, in declining and even dangerous areas and as a result may have high vacancy rates, deferred maintenance, functional obsolescence and demand a high level of hands-on management from their individual owners. As of this writing, they can typically be purchased for cap rates of 12% but may generate less income than other properties de3. Unless you are an experienced investor, don't buy Class D properties. The goal is to buy a particular class of property in the same area class. In other words, buy a Class B property in a class B area. Alternatively, buy a lower class property in a higher class area. In other words, buy a Class C property in a class A area or one in the path of progress. The reasoning is so that you can possibly change the Class B property bought at higher cap rates (lower in price) into a Class A property which can be sold for lower cap rates (higher prices). This "infill opportunity" is typically only possible if the area is better than the property. About the Author Karen Hanover is a highly successful real estate investor and syndicator with over $32 million in personal property ownership. As an active investor, Karen understands the challenges faced by investors trying to get a deal done. Karen is a licensed commercial real estate agent with Marcus and Millichap, the largest national commercial brokerage in the country. Karen is a Certified Commercial Real Estate Advisor, President of the National Apartment Investors Board and Senior Instructor for both the Self Storage Education Institute and the Apartments Education Institute. She is also a CCIM Candidate, a highly prestigious designation in commercial real estate. Additionally, Karen is soon-to-be published author on apartments, self storage and emerging markets and has developed the Commercial Real Estate Analyzer software to assist investors with analysis of commercial property. Karen travels around the country as a highly sought after speaker and lecturer on How to Make Money in Commercial Real Estate including apartments, self storage, office and retail property. With high level professional education from the most prestigious institutes in commercial real estate as well as lessons from the street, Karen Hanover has helped thousands to create massive wealth in commercial real estate even in today’s uncertain economy. spite their higher cap rates because of higher maintenance and management demands. Rules of Thumb: 1. Class A & Class B properties are purchased for appreciation potential.
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That’s Right! Attend this event In Kansas City on August 15th and 16th for FREE!
Jam packed event filled with information you can use to make money now in this economic market! How to invest in real estate that goes UP when the economy goes DOWN. How to break the cycle of work/sleep/work and get your first deal done in under 30 days! No money? No Problem! How to attract all the non-bank money you will ever need to do your deals. Plus other bonuses valued at more than $779. This Conference is put on by David Lindahl and his training team. We just found out about this event and wanted to get it out to you so you can save the date. We will be sending out sign up information via email next week and posting on the MAREI calendar!
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Tucker One Properties, Inc.
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7011 W 121st St, Ste 100, Overland Park, KS 66209 Jackie White / 913-338-0100 / Fax 913-338-0107
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Yellow Letter Automated Mailings Pre NOD Leads Available
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Phone: (904) 880-2742 Fax: (904) 880-2741 Email: firstname.lastname@example.org
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———— Investment News ————— 816-453-5532 or 816-456-1843 email@example.com ———— Investment News —————
Page 7 Page 7
Charles C Connely, IV, CCIM CC Connely & Associates President 12100 E 65th St. Court Kansas City, MO 64133 816-358-1726June 2009 Guest Speaker
FREE Bandit Signs For just the cost of shipping & handling, you get 25 signs with your customized message printed on 9”x12” econoboard, plus 25 easy to use wire stakes! Just go to www.MAREInet.com and click on Membership Benefits & scroll down to the section on Bandit Signs (near the bottom of the page)
HomeDepot.com Bi Annual 2 % Rebate & Volume Pricing For MAREI members visit the benefits tab in the member library online.
Discounted Books Do you hand out books at your marketing or need a particular book the whole office needs to read. Use our Discount at NoloPress or Dearborn Publishing? MAREI members: Go to the benefits tab in the member library for the flyer on discounted books for discount info!
Provide free copy to your tenants when they move. MAREI members visit the benefits tab in the Member Library
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For Investors, By Investors
Connect with our Team of Specialists
www.RealtyResourceKC.com 816-523-4400 Page 8
Affinity Group Management Company: 1-800-790-4872 PHONE, 913-894-6534 FAX Email Debbie@wrennins.com Email firstname.lastname@example.org
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www.MAREInet.com / Vendor Page
Discounted Printing Vista Print Visit the MAREI vendor Page under printers for Up to 75% off at Vista Print 60 Day Free Trial
Send Mass Emails, Easy to Use Load up your mailing list, today! 100’s of templates or Create your own. We recommend Constant Contact Look under Web Services on the Vendor Page at MAREInet.com
FREE Trial Web Site
Hundreds of easy to use templates. Get up and running in a matter of minutes. Property Marketing pages that link to other sites. Contact collection web forms. Auto Responders. Database Management Go to Web Services On the Vendor Page at MAREInet.com And click on FREE Trial Web Site MAREI Members Up to 20% discount off regular pricing on print services. Discount card mailed in your New Member Package.
National Discount Program for MAREI Members Get pricing better than your local painting contractor. Discount Card Mailed in Your Membership Package
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will complete all your rehab needs quickly, at a reasonable price.
Tenant Screening Discounts Visit Benefits Tab In MAREI Member Library To Access Tenant Screening Discount Options
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Call Anthony @ 816-606-0266 or Emily @ 816-252-0095 Totlrenovations@comcast.net
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Would you like to get your name In front of our membership? Business Memberships $499 a year 2 people Ad here in the newsletter Listing in the Vendor Directory Your Discount or Bonus in the Benefits Library. GET INVOLVED
Do you want to grow your real estate related business? Need to meet a lot of the members at MAREI, fast? Consider getting involved. By becoming involved you will gain greater visibility to the membership. Volunteer to Assist At Meetings If you are available on the 2nd Tuesday of each month by 5:45 to help with set up and check in table from 5:45 and 7:30, could be available at least 10 out of 12 months during the year, and we could use your help. Need to have been an active member of MAREI for at least 6 months. Duties: Check in Guest and Members before the meeting and hand out name tags. Keep the check in table organized and paperwork filed properly. Ambassador at the door before the meeting. Hand out information about MAREI to prospective members and register them as members before and after the meetings. Assist with packing up at the end of the meetings. Time commitment about 2 hours (besides the meeting) once a month. Will receive $25 MAREI dollars to renew membership and register for events for each meeting. Intern at the MAREI Office
Just want to advertise on a monthly basis. This ad just $25 a month for MAREI members.
Or an ad in the Online Vendor Director Just $25 a month for MAREI Members.
Once a month, a few days after the MAREI meeting, we need to process all new members and thank all guests for attending. We need assistance with the assembly of these member and guest letters. If you have 2 to 4 hours during the day on the Wednesday or Thursday after the MAREI meeting each month, have a fairly good working knowledge of Microsoft Office Programs (or something similar) and can commit to at least once a day for 6 months, we would love to have you intern in our office. Earn MAREI dollars for time spent to use in the purchase of membership and events. Teach a Workshop
MAREI Online Forums Get your questions answered Post on the Online Forums www.MAREInet.com
Watch our future newsletters about the new PHP program. If you have knowledge and the willingness to share and the ability to teach others, and see a topic on the list that is in your area of expertise, volunteer to teach a workshop. This is an excellent way to share your expertise and grow your business. For example one class would be on appraisal, so if you are an appraiser this is a great way to connect with members and share your expertise and business (plus some free advertising)
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Closing Timelines Impacted By New Government Regulations
Consumer protection regulations have been put in place to ensure that homebuyers receive better information, especially regarding cost disclosures, earlier in the mortgage process. ing.” The early disclosure requirements also now cover refinancings and home equity loans.
prohibit a lender from charging a consumer any fee,
except to obtain a credit report, until after the early disclosures have been provided.
permit a consumer to expedite the closing of a mortgage loan subject to the early disclosure provisions to address a personal financial emergency, such as foreclosure.
inform a consumer that he or she is not required to
complete the transaction because the consumer has received the early disclosures or applied for a loan. Please discuss these new provisions with your lender or mortgage broker as well as your settlement agents to avoid unnecessary delays during the transaction. Provide the settlement agent information to the lender as early in the process as possible. It’s critical that any third party fees that impact the APR are accurate. Help your homebuyers understand that their interest rate impacts their APR. Until that rate is locked with their lender, which is at the buyer’s discretion, the initial Truth in Lending Disclosure (TIL) will not be accurate, so a PreClosing TIL will likely be needed. It’s recommended that buyers should minimally plan on locking at least 10 business days prior to the date they wish to close. For more information, go to http://www.fdic.gov/news/ Add on Spouse or Partner $50 Add on Spouse or Partner $15 Business Membership $499 Business news/financial/2009/fil09026.html. Membership $135
Additional Employee $50 Additional Employee $15 Standard Membership $99 Standard Membership $30
New Truth in Lending disclosure requirements take effect July 30, 2009 and the timing of your closings may be impacted. With the new regulations you’ll want to plan for at least a 30-day close if the homebuyer is financing the property. Regarding potential closing dates, it will be important to set realistic expectations for all parties early in your transactions. As of July 30, lenders will be required to comply with revised Truth in Lending Act good faith estimate (“early disclosure”) requirements which will:
require delivery or mailing of the early disclosures
within three business days of receiving a consumer’s mortgage loan application. A lender also must wait until at least seven business days after delivery of the disclosures before consummating the mortgage loan.
require corrected disclosures to be delivered at least
three business days before consummation if the annual percentage rate (APR) provided in the early disclosures changes more than .125% from the initial Truth in Lending Disclosure.
expand the requirements to mortgage loans secured
by any dwelling of a consumer. The requirements no longer are limited to a consumer’s “principal dwell-
Other regulatory changes have been implemented by Fannie Mae and Freddie Mac’s adoption of the Home Valuation Code of Conduct (HVCC) on May 1, 2009. NAR Government Affairs is taking several steps to raise concerns about implementation of the HVCC, its effect on consumers, and the use of appraisal management companies (AMCs) by lenders in some areas of the country. HVCC regulations also have the potential to affect closing timelines.NAR’s intent is to work toward an immediate 18 month moratorium on HVCC. Here is a NAR Government Affairs Information Pack on the issue.
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INVITE A FRIEND To a MAREI MEETING
MAREI Members do you have a friend, coworker, or per. son who provides you a service that is interested in real estate investing? Our Next meeting will be an excellent opportunity for a new potential member to check us out. Please cut out or copy this page and provide it to all of your friends who want to attend and have never been to a meeting and they will be able to attend for FREE! If they have attended before, please encourage them to join, it’s only $99 a year and the get access to so much training through the web site. And if they are just not quite ready to join, and they have attended before, remind them that the guest fee at the door is $25, but if they reregister at www.MAREInet.com through the Calendar of Events, they can save ten bucks.
Free entrance to General Meetings Digital Version of this Newsletter emailed to you Discounts to Paid Events Access to Online Library Post Houses on our Classifieds Interact on Member’s Only Message Board Post your Profile & Read Profiles for Other Members E-Messaging System through Profiles Membership List in Excel (no emails) Discount Card to Sherwin Williams Discount Card to Office Max
Cost: $99 annually for one, $50 per additional To Join, fill out form below.
FREE GUEST ENTRANCE FOR FIRST TIME ATTENDEES NAME: _________________________ PHONE: ________________________ EMAIL: __________________________ ADDRESS: _______________________ CITY: ___________________________ STATE: _______ ZIP: ____________
Name #1: ______________________________________________ Email: _________________________________________________ Name #2: ______________________________________________ Email: _________________________________________________ Company: ______________________________________________ Address: _______________________________________________ _______________________________________________________ Phone: ________________________________________________ Pay in full up front
Standard Membership $99 Add on Spouse or Partner $50 Business Membership $499 Additional Employee $50
Charge Credit Card Quarterly
Standard Membership $30 Add on Spouse or Partner $15 Business Membership $135 Additional Employee $15
REFERED BY: ___________________
Free entrance is limited to the June 2009 meeting at the Overland Park Marriott from 6 pm to 9 pm for first time guests. If you have attended before, remember guest fee at the door is $25. Membership is just $99 for one and you can join right now on our web site at www.MAREInet.com! Be sure to bring your business cards and flyers for networking. Don’t forget your note pad, because you will want to take notes during the presentation and take down names and contacts while you are networking. Arrive early and have dinner at one of the fine establishments in the area!
Check Enclosed (make payable to MAREI) Credit Card: ____________________________________________ $______________________________ Total Amount ___________________ Expiration Date
_______________________________________________________ Name as it Appears on Card _______________________________________________________ Billing Address (if different from above) ______________________________________________________ Signature Date
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MAREI has worked very hard to bring our members benefits that offer huge saving. Any one could save you more than the cost of your annual membership dues of just $99. General Meetings: Still FREE for members, $15 to $25 for non members. Library Packed with 100’s of articles, ebooks, forms, & documents Newsletter Archives We have over 3 years of archived Newsletters Kinko’s Discount Discount Card for up to 20% off Regular Printing Prices Avis Car Rental CyberCollect For collection on bad checks Enterprise Rent-A Car HD Supply For an average of 14% in savings of regular book prices Humana One Health Insurance Office Max Discounts of up to 65% from retail price Trak-1 Technology For background checks FREE Trial Web Site Good for up to 10 day trial Constant Contact Bulk email services with a FREE 60 day trial. Legislative Resources MAREI & National REIA have teamed with State Net to track all relevant legislation Forums Ask questions & interact through our member’s only forums Classified Post your properties for sale on, no cost to members General Meeting Archive Over 2 years of Recorded General Meetings Apartment Moves / Smart Moves Free copies of moving planner Budget Rent a Car Dearborn Publishing Discounts of up to 40% of books, videos, & other resources First Advantage Save Rent Tenant Screening Home Depot New—see web site for details NoLo Press Discounts of up to 40% on books, video & other resources. Sherwin Williams National Account for better than Contractor Rates Bandit Signs Free starter package of signs for cost of shipping Audio Acrobat Audio & Video Hosting, Free 30 day trail Go to Meeting / Webinar Hold an online meeting, FREE trial and $10 off PHP Program National designation, Professional Housing Provider, classes and meetings designed to qualify for this program coming soon. Add PHP to your business cards and web site for better credibility with the general public FED EX National shipping account, more info coming soon. Your Discount Do you have a product or service that you would like to market to our members and offer a discount or bonus? Consider becoming a vendor member to access all of the above benefits plus place your advertisement in our online vendor directory and in the Investment News, our monthly newsletter.
REIA rental National Rental Web Site, discounts coming soon Top National Trainers We bring in to MAREI 3 to 5 of the nations top Real Estate Investor Training people through out the year. Our local investors will share some of the tricks of the trade, but if you want the complete scoop, learning from a national trainer is the way to learn. These speakers offer great hands on training at our meetings and workshops and usually offer their full training programs or bootcamps for a discount to our members and then share a part of the purchase price with MAREI to help us cover overhead and keep our membership dues at the same low $99.
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(Continued from page 1)Legislation
(Continued from page 3) Commercial Real Estate Investments
gage, its just not profitable) and then there are the millions of mobile homes for sale that no one will finance except the sellers. Remember, this federal law is close to passage. It is already passed the house and is currently in committee in the senate. If we act in large enough numbers, we have a shot at getting the law properly amended. Please take time to listen to the call on the left, take time to Google “HR 1728” for the state tracking of the bill and to get thoughts from other people on the subject. Collect your thoughts, and then contact your senators. You can find your senator’s contact information online at:
Cash Flow ÷ Initial Investment = Cash on Cash Sample Calculation: $60,000 Cash Flow Divided by $500,000 Initial Investment Equals 12% Cash on Cash The Cash on Cash percentage can be looked at as a first year return to the investor comparing how much the investor would receive in cash flow from the property when the property is purchased using financing. It is a measure of performance the investor can look at to compare how their money is working for them in one property compared to another property or investment, when financing is used. Many investors use the Cash on Cash percentage in their investment decisions as more accurately reflects their results than does the Cap Rate which ignores the financing used to purchase the property and the payments that must be made on that financing from the NOI of the property. About the Author Karen Hanover is a highly successful real estate investor and syndicator with over $32 million in personal property ownership. As an active investor, Karen understands the challenges faced by investors trying to get a deal done. Karen is a licensed commercial real estate agent with Marcus and Millichap, the largest national commercial brokerage in the country. Karen is a Certified Commercial Real Estate Advisor, President of the National Apartment Investors Board and Senior Instructor for both the Self Storage Education Institute and the Apartments Education Institute. She is also a CCIM Candidate, a highly prestigious designation in commercial real estate. Additionally, Karen is soon-to-be published author on apartments, self storage and emerging markets and has developed the Commercial Real Estate Analyzer software to assist investors with analysis of commercial property. Karen travels around the country as a highly sought after speaker and lecturer on How to Make Money in Commercial Real Estate including apartments, self storage, office and retail property. With high level professional education from the most prestigious institutes in commercial real estate as well as lessons from the street, Karen Hanover has helped thousands to create massive wealth in commercial real estate even in today’s uncertain economy.
Call them, send them an email, and send them a letter. Vena created several sample letters if you don’t have the time to make your own. You can download them and edit them in Microsoft Word:
Letter to send if you are a Realtor Letter to send if you Sell with Seller Financing Letter to send if you Buy with Owner Financing
One last thought is that many of our Senators may be more visible on the internet. Look for them on Facebook, Linked In, Twitter, or your favorite social networking site. Post your thoughts on this bill on their online sites.
Stay up to Date on Current Legislation Members of MAREI Log On Go to www.MAREInet.com Click on Member Area Enter Your User Name & Password Click Log In Click on Library Click on Legislation Look for State Legislative Tracking Currently no state legislation of importance in KS or MO or NE Several at the Federal Level Do you invest in other states. Check out what’s going on in your area.
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New Law Protects Tenants
While the foreclosure crisis and the homeowners who are losing their homes have been covered by the media, renters whose landlords are foreclosed on are often overlooked. The new Protecting Tenants at Foreclosure Act of 2009 aims at helping renters.
Protecting Tenants at Foreclosure Act of 2009 was passed as Title VII of Public Law 111-22. The law was effective as of May 20. Many tenants with a lease will be able to stay in their homes until the end of the lease. Tenants living in Section 8 housing are also protected. New owner of a foreclosed home that is currently housing a Section 8 tenant must accept the lease and housing -assistance payment contract. The law expires in 2012. The Protecting Tenants at Foreclosure Act focus is to protect families, making sure they have a place to live. Some states and cities have other protection in place to provide moving expenses for the Tenants.
SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY. (a) In General- In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to-(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and (2) the rights of any bona fide tenant, as of the date of such notice of foreclosure-(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or (B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1), except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants. (b) Bona Fide Lease or Tenancy- For purposes of this section, a lease or tenancy shall be considered bona fide only if-(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant; (2) the lease or tenancy was the result of an arms-length transaction; and (3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy. (c) Definition- For purposes of this section, the term `federally-related mortgage loan' has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602). SEC. 703. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES. Section 8(o)(7) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended-(1) by inserting before the semicolon in subparagraph (C) the following: `and in the case of an owner who is an immediate successor in interest pursuant to foreclosure during the term of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner-(i) will occupy the unit as a primary residence; and (ii) has provided the tenant a notice to vacate at least 90 days before the effective date of such notice.'; and (2) by inserting at the end of subparagraph (F) the following: `In the case of any foreclosure on any federally-related mortgage loan (as that term is defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law that provides longer time periods or other additional protections for tenants.'. SEC. 704. SUNSET. This title, and any amendments made by this title are repealed, and the requirements under this title shall terminate, on December 31, 2012. Information provided by Pete Mendenhall at PHD Capital, LLC, he can be reached at 816-523-4400 x 226.
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Wednesday Workshop 4 Week Rehab
"Smart Investors Know the In’s and Outs of Rehabbing a House Efficiently and Effectively for Maximum Profit." Landlords, you may be able to grow your portfolio and have a much larger cash flow, if you buy a fixer upper, rehab, and place your tenant in the property yourself rather than buying a completed package. This why you KNOW that it was done right from the start and will not have surprise repairs down the road. Retail Sellers, you will want to renovate and sell your properties quickly and in today’s Buyer’s Market, those buyers can be picky. You need to know the right things to rehab to make your house stand out from the rest. If you don’t know how to plan and budget the rehab, BEFORE you buy, you may get stuck with a lemon that you just can’t give away. Wholesalers, the majority of your buyers will be Landlords and Retail Sellers. You need to know what they know so you can find the best houses that will work with your buyers. Don’t waste time on houses that will not work for the Landlords or Retail Sellers or that you can’t will not be able to offer for sale at the price your buyers would be willing to pay. And you just might find that one perfect house that you want to add to your portfolio and you will need to know how rehab works. Don has over 20 years of construction experience from Section 8 to building New Homes for first time home buyers in Denver to step up houses Overland Park. He started his company Tucker One Properties in 1999. Averaging about 10 rehab houses a year from 1999 to 2005, he has renovated a bunch of bread and butter houses: first time home buyer houses. He is condensing his 1/2 day class, 4 week rehab into a 2 hour workshop. Find out What houses to buy, don’t waste time on projects that are going to be time consuming as they tend to grow and grow and drain the profits. The Purchase Formula, find out how to work the numbers, if the numbers don’t work, don’t buy! The Schedule, there is a sequence of events and if completed in the wrong order can cost you a ton of extra work and profits. Items Often Overlooked, many “rehabbers” can make a house pretty, but they overlook a lot of less visible items that can cost you sales time and profits.
PLEASE CHECK THE APPROPRIATE Workshop Four Week Rehab for Members $25 Four Week Rehab for Non- Members $25 Add MAREI Membership for 1 $99 Add MAREI Membership for 2 $149
_________________________________________________________ Name _________________________________________________________ Company _________________________________________________________ Address _________________________________________________________ City / State / Zip _________________________________________________________ Email Address _________________________________________________________ Business Telephone Business Fax
Credit Card _______________________________________________________ Credit Card Account Number $______________________________ Total Amount ___________________ Expiration Date
_______________________________________________________ Name as it Appears on Card _______________________________________________________ Billing Address (if different from left) ______________________________________________________ Signature Date Check fax registration to 816-523-4448 Seating is very limited: only 12 per workshop. (sold out last time) Questions, please call 816-523-4400 x 222. Tucker One Properties, Inc. www.TuckerOneProperties.com 115 E Gregory Blvd Kansas City, Mo 64114
Join Don on July 22nd at his office for this 2 hour workshop from 3 pm to 5 pm. Class is limited to the size of our room which will seat about 10 comfortably, 12 if we are a little more friendly. Cost is $25 for MAREI members and $35 for non-members. MAREI members can also use MAREI credits to pay for the workshop. ($25 MAREI credits are earned for every new member you refer to MAREI). Must be preregistered the day before the event. Questions, please call Kim at 816-523-4400.
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