Investment News

Newsletter of Mid-America Association of Real Estate Investors June 2008
414+ Members

The Path to Private Lending Putting powerful profits in private hands
By Jerry Clevenger, PhD Welcome to the world of high-yield mortgage investing. Never again will you need to pay the high rates from hard money lenders and other financial institutions. A private mortgage loan is similar to a bank mortgage, except it is funded through an individual rather than a financial institution. The private lender takes on the risks and rewards typically held by mortgage lending institutions. This type of lending can offer great returns and low risk if structured properly, because it is secured against the actual real property as collateral. And to further increase the safety of the principle invested, the loans should not exceed 70% of the appraised value of the property. In addition to the appraisal I like to get an opinion of a realtor in the area as to the quick sell value. Private mortgages have several benefits to borrowers and investors. Investors holding private mortgages can receive interest rates significantly higher than standard rates offered by banks. Currently yields are 218% plus greater than CD rates. Monday, June 2, the national one year CD rate was 3.09%. The one year private mortgage rate had a minimum base rate of 6.75%, according to the Private Portfolio Lenders Report. In most respects, the private lender should look at him or herself as a mortgage banking firm and should do everything a mortgage company would require when deciding whether someone qualifies for a mortgage. They should also demand an interest rate that makes the risk worthwhile. The interest rate for a direct private mortgage ranges from 6.75 to 11.5 percent. The range is dependent upon many factors, including the length of the loan, the purpose for the loan, the property, and the exit strategy. Get a copy of the Private Portfolio Lenders Report for a guide in establishing rates. The mortgages are usually structured like hard money loans: short-term money loans from six months to three years typically based on the property’s equity value. In general, private mortgages hover between 55 and 70 percent loan –to-value (LTV). The lender should be sure the LTV does not exceed 70% so there is an adequate equity cushion in the transaction and lenders should perform due diligence on each loan. These small, residential mortgages, would normally be given by one person to another. They have to collect as much financial information as possible from the mortgagor. Professional real estate investors are usually a safer bet than individual homeowners. Why? They can demonstrate a proven track record, and have experience. Typically, they are using the property to generate income and planning to sell the property after making improvements. A private mortgage can take on different structures, depending on what the parties are willing to agree. While most private mortgages take on terms similar to hard money loans, it is possible for the lender and borrower to come up with a completely different structure. Most private loans are structured as short-term loans. Therefore, it is essential that you know how to borrower’s exit strategy (the plan for repaying the loan at the end of the term). There are many ways a borrower can “exit” the private loan: 1. Selling the property before the note is due. 2. Financing through a traditional lender. 3. Refinancing with another private lender who wants to hold for a longer term. 4. Bringing in an investor partner. 5. Self-amortizing the exit.
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MAREI
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
INVESTMENT NEWS © 2008 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 two 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 three 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.

MISSION STATEMENT
To provide education, discussion and networking opportunities to help real estate entrepreneurs & investors reach their financial goals using sound, honest business practices.

BADGE POLICY
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.

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 115 E Gregory Blvd, Suite B Kansas City, MO 64114 Info Line: Phone: 816-374-5885 Fax: 816-523-4448 www.MAREInet.com Info@MAREInet.com

Mid-America Association of Real Estate Investors is a Member of the National Real Estate Investors Association And the National Association of Responsible Homebuilders & Remodelers

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Raise Unlimited Capital for All Your Deals with Private Bank Concept
By Edwin Kelly, Director of New Business Development for Equity Trust Company One of the most common stumbling blocks to investing is not having enough cold, hard cash to act quickly to participate in hot deals. Imagine being able to create a funding source from which you could easily and quickly draw upon funds to finance your investments. You can by using The Private Bank Concept. Recent estimates place over $4 trillion within IRAs, 401(k)s and other qualified programs across the country. These funds can become available to you through self-directed IRAs. The “private bank” concept is borrowing money from an individual’s IRA (not a financial institution) for investments. For example, an investor can borrow money from someone else’s IRA to complete an investment and pay the IRA back an amount of interest that is agreed upon in advance. Since IRAs are an exempt entity, interest earned on the money loaned is tax-free or tax-deferred depending on your type of IRA. Lending institutions, insurance companies and venture capitalists have been using similar concepts to raise money for years. By utilizing self-directed IRAs, you can apply this concept to your investments, allowing you to become more profitable and stay ahead of the competition. How to Create Your Own “Private Bank” in 3 Easy Steps The following is a Private Bank example using real estate, but this concept can be used with other investments such as notes, tax liens, and private placements. 1. Find an investment property and negotiate a 75% or less loan-to-value ratio to give your investors safety for their investment. Build in enough gross profit to pay your investors an attractive rate of return. Remember, it’s not the cost of money, but the availability of it, that is important. Finally, leave yourself enough time, through a contingency clause, to find your investors. 2. Present the deal to potential investors, such as business acquaintances and local professionals (e.g., doctors, lawyers, and business owners). It is important that you offer an attractive rate of return and explain the security they have in the transaction by offering them the first lien on the property. Remind your potential investors that, in addition, their returns will be able to grow in a tax-deferred or tax-free environment, depending on which type of IRA they have. 3. Now that you have the investment and investors in mind, the final step is to open an Equity Trust self-directed IRA for each investor. “Private Bank” Advantages

♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦

Allows you to participate in more deals More deals = More profits You are able to offer cash for investments to receive deep discounts Beat out your competition Free up personal money for personal needs Lengthy committee approvals Bureaucratic red tape Potential credit risks Tying up your personal funds

What You Avoid by Creating Your Own “Private Bank”

For more information about the Private Bank concept, selfdirected IRA investing and how to get started, please contact Equity Trust Company via www.trustetc.com or by phone at 1-888-ETC-IRAS.

Edwin Kelly "Self Directed IRAs"

With a self-directed IRA or other selfdirected account can invest your retirement funds when, where, and how you want. Create your financial future with the freedom to make choices with your retirement plans. Self directed IRAs give you the unique ability to choose from a variety of investment options such as real estate, mortgages, private loan, and more. And, by diversifying your investments, you may protect and enhance your retirement. Join Edwin Kelly, the director of business development with Equity Trust Company to learn how you can purchase real estate with your Equity Trust Company self directed IRA or other self directed retirement account. Find out how you can do this both tax deferred or TAX FREE. Find out how you can acquire a $40,000/year tax deduction and invest the proceeds. Need more funding for your deals by creating your own private bank with unlimited funds for your real estate deals. Speaking at MAREI’s EXPO 2008 on Sunday the 12th. Visit www.MAREInet.com or page 6 for more info.

Once your investors have established their accounts, and the particulars of the investment have been agreed upon, you are ready to utilize these funds for your investing strategy.

www.MAREInet.com

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General Meeting ~ Tues June 10th ~ 6pm Networking ~ 7pm Presentation ~ Overland Park Marriott

MAREI Presents:

Learn the Do’s and Don’ts of Private Lending
…so you can protect your investments and fund your deals
Join Jerry Clevenger as he shares his tested secrets on how to correctly set up a Private Loan when borrowing other peoples money or when it’s your money on the line in someone else’s deal! Seasoned investors understand that when you have several sources of funding for deals including one or two private investors, you have the ability to do more deals, make more money, and become financially free. Find out what you absolutely must do to protect the lender’s investment, what forms are necessary to make sure the lender gets their money back or the property in a worst case scenario. While we would like to think that all private borrowers are good as gold, they do sometimes have hardships or deals that go south, the private lender, just like the brick and mortar bank needs to secure the investment with documents. Learn how to handle the money so that no one goes to jail. Find out how to fund the deal using the title company or other closing entity to the borrower never touches the funds and when the property sells, have the closing company pay the lender first! Have you ever wondered how some investors are able to buy several houses every month, with quickly and easily while others are still hunting to find funding for one house a year. Quite simply the answer is in Private Lending. With a private lender or two available to fund each and every deal, many investors are able to buy several houses, with no credit checks, lengthy bank approvals, and other hoops to jump through. And while the process is fairly easy there are a few things you need to know to be on the borrowing side of a Private Lending Transaction as well as to protect yourself from the Lender's side of the transaction. Join us on Tuesday the 10th to learn: • What is a Private Lender and How to Find Them • All the Do's and Don'ts of Private Lending • How to Set INTEREST RATES in the Transaction. • Documents You Need for Every Deal • What you need to DISCLOSE to your Lender • How to Handle the Money so it is Secure • What you Absolutely Must Know to do a Deal. If you plan on being in real estate for a while, you absolutely must know how to work with Private Lenders. Jerry has been on both sides of the transaction as a borrower and as the lender in numerous transaction and will be speaking to you from experience. plan and a system in place to stuff the most cash in your pocket from each one. So, whether you’re a seasoned investor with a couple of ‘extra houses’ that you want to move; or you’re a new investor who wants to make sure you set yourself up for success, this exciting event is just what you’ve been looking for. You’ll walk away at least 10 tips to help you sell your houses quickly! Seriously - don’t miss it. Jerry Clevenger has raised over 36 million dollars for real estate deals. He has been quoted as a real estate analyst in “Wall St. Journal”, “Business Week”, “USA Today”, and “Financial Planner Magazine”. Jerry is the author of the book “Paths to Prosperity” and was featured in the best selling book “Millionaire Real Estate Investor”. ( Featured on our web site) He is one of the countries leading educators and historians on O.P.M. – other people’s money. And has been investing in the Kansas City Market for over 10 years.

Tuesday June 10th 6:00 pm Networking 7:30 pm Presentation Sponsor Meeting: $200 Reserve Networking Table: $35 for Member’s

Overland Park Marriott Located I435 & Metcalf at 110th Members Attend FREE $25 Guest fee at Door PreRegister for $15 on Web Site More info www.MAREInet.com

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Everybody Wins
By Robert Shemin, Esq In their desire to create a Win/Win transaction for everyone, well meaning Creative Real Estate® investors sometimes allow themselves to be taken advantage of. Don't let this happen to you! Remember "Win/Win" also includes "you." Also remember that you are trying to not only run a business, but to stay in business. When it comes to working with others, make sure you know all the limits - yours and theirs - and set boundaries for yourself. Never settle for less than the best on your team. Any problems often begin with the structure of your team. The professionals you choose for your team may be your best business decision - or your worst! In fact, some of the most incompetent people you encounter may be other licensed professionals in the business. Many of them will not understand your plan, or they may even be intimidated by your ideas. Incompetent professionals are a dime a dozen, and you may have to search to find good professionals never settle for less than the best. Be especially careful with the mortgage brokers you work with. It is easy for an unscrupulous mortgage broker to pad your transaction with unnecessary fees, and the worst of them will cost you even more money by giving you a loan with a higher interest rate than you deserve. Even as little as half a point can mean more money for the mortgage broker, and a lot more interest for you! You already know that any documentation you use for your Creative Real Estate® transactions should be carefully examined. Make sure that you include any settlement statement on loans you acquire. By law, every time a mortgage broker puts together a settlement statement they must go over the documents with you carefully, clarifying the amounts of and the reasons for any fees. During this process you may catch fees that may seem legitimate, but which, upon careful examination, are not necessary. important for you to go down to your County Recorder's office and file that notice. First have your notice of option notarized, and then take it down to your County Recorder's office for filing. This process only costs about $10.00 and is well worth the small cost. You can also file through your title officer who can notarize and file the notice of option for you. Filing protects your interest in that property by clouding the title, and the property cannot be closed on by someone else unless you release your option. It will also protect you if someone tries to file other liens on that property, because legally you must be first notified. By filing, you are basically clouding the title, and nothing can be done with that property as long as the notice is in force. So whether you're doing lease purchase or pure options make sure you protect your interest! Real estate attracts frauds, so to protect yourself, research your titles properly. Thoroughly research your titles and warranty deeds. Be sure to perform your due diligence thoroughly. You may receive a title or a warranty deed but until you know for a fact that they have been recorded, you will be vulnerable. The real estate business is one that attracts frauds, so to protect yourself,
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Robert Shemin "Millionaire Real Estate Investor"

Attorney, Robert Shemin, is another favorite at MAREI events. He has high energy and has plenty of implementable ideas! Robert began in 1992 when he met a couple who drove an old beat up pick up, yet had a monthly net income of over $65,000 solely from real estate. Inspired, Robert shifted his focus to real estate and personally bought more than 450 homes while documenting his techniques. If you want an easy, low-risk way to attain financial freedom, then this There are some steps you can take to make sure is it. If you want to quit your JOB, then discover solid, proven stratethat you stay in a Win/Win transaction: gies for attaining financial independence through real estate. Find out how to locate, evaluate and negotiate for properties in one of the naStay in control of your transactions from start to tion's most dynamic markets and how to apply your new knowledge of finish. buying in your own back yard. Robert is an expert at systems and will Sometimes, out of ignorance, a real estate agent will be sharing several of his: tell you that what you're doing is illegal. Remember • How to Find Great Deals many real estate agents will not have dealt with a • How to Negotiate the Best Deals Creative Real Estate® investor before, and some may even feel threatened by you. The fact is, any time you • How to be the Best Landlord put an option on a property, you are representing that Robert's course is an excellent beginner course to get you started property as a principal buyer so it makes it perfectly and for the more experienced investor you will get a great refresher legal for you to transfer or assign the property to and still walk away with a few new items to implement in the next someone else. You are not acting as a broker. month! Speaking at MAREI’s EXPO 2008 on Sunday the 12th. Visit
File your notice of interest to protect your interest in specific properties. Any time you put an option on a property it is extremely www.MAREInet.com or page 6 for more info.

www.MAREInet.com

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PLUS....
We will be joined by many local and national Vendors who have products and services to help make your business easier!
On October 11th & 12th, 2008 at the Overland Park Marriott Hotel in Overland Park, KS, EIGHT of the nation's sought after, successful, multi millionaire Real Estate Speakers who live what they teach will be front and center to reveal their secrets, strategies and systems directly to YOU! We have lined up this all-star cast to offer YOU an unique experience and exclusive content that will launch your investing career into outer space! These speakers travel the US speaking at Conventions, Expo's, and Boot Camps and we have persuaded them to come to the Kansas City Area to teach you the highly successful tactics that they use every day to make millions of dollars investing in Real Estate.

So consider this your invitation to come and discover the closely guarded secrets from the nation's ELITE Speakers, Trainers & Authors on such topics as:
How to get Started the RIGHT way in Real Estate How to get Started the RIGHT way in Real Estate How to Make Big Profits in Apartment Buildings How to Get Those Properties Renovated Effectively so they Sell Fast! Exploring the Alternative Investment Strategy of Buying Notes How to Create Your Ultimate Internet Marketing Machine

and MUCH MORE!

WE ONLY HAVE SPACE FOR 200
With all the opportunities in today's Real Estate Market to buy up GREAT BARGAINS, this event will fill up fast. Don't wait until the last minute or you may miss out! Visit www.MAREInet.com and click on EXPO 2008 for more info and registration!

SEATING LIMITED

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Service Guide
Advertising Supplement
Accurate Title Company, LLC Ron Kraft
Title, Closing, & Escrow Services
7011 W 121st St, Ste 100, Overland Park, KS 66209 Jackie White / 913-338-0100 / Fax 913-338-0107

HEARTLAND
COMPLETE HOME INSPECTIONS

Heartland Complete Home Inspections
Complete Home Inspections Well & Septic Tank Inspections (ITA) Certified ASHI Approved

www.AccurateTitleCo.com

Chuck Bolton 816-590-5321

Own Your Own Vacation Townhome 7 Miles from the Maingate of Disney

Asset Protection Insurance Agency Investor Owned Insurance

24 month lease back guarantee

MAREI Members

Two Units for the Price of One

Units Starting from the $290’s

Call 863-424-0130 www.biminibayresortandspa.com

• • • • • • •

Vacant or Occupied Properties Properties Being Rehabbed Hazard & Liability Insurance Entire Portfolio Under One Policy Monthly Premium Notice Fast Quotes Professional, Courteous & Knowledgeable Staff

APIA, Inc. 877-752-2742 www.reoins.com

Dedicated to Excellent Service

www.MAREInet.com

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Newsletter & Service Guide
Our monthly newsletter is the Investment News. All of our MAREI Business members receive a Business Card ad or a monthly $25 credit for a larger ad. The Investment News is currently mailed out in paper version to approximately 320 addresses and handed out at our monthly meetings. We also post our newsletter archives on our web site for any new members or guest to read past articles. Or write an article to be included in our newsletter that will showcase your expertise. We will include your contact information at the end of the article. Cost is currently just $50 for a one page article in the newsletter and posted on the web site for members.

FREE LEGAL CONSULTATION*
Consult with an Attorney Experienced in
Tile and Stone Direct to the Public -- at Wholesale Prices! Call Randy Deutch www.TileandStoneWarehouse.com 9821 W 67th St : Merriam KS : 913-432-7900

Real Estate Law and Estate Planning

David R. Nachman
816-474-4114 * 15 minute consultation

Tucker One Properties, Inc.
Rehab ~ Wholesale ~ Foreclosures www.TuckerOneProperties.com
115 E. Gregory Kansas City, MO 64114 Phone: 816-523-4400 Fax: 816-523-4448

KC Family Home Buyers Joe Shojayi
Joe@kcfhb.com 913-851-4424 888-279-3058 www.kcfhb.com

Joe Reece
Property Specialist Cell: 816.507.4203 Email: jrprops@yahoo.com

Kyle Bush Jeff Williams
We specialize in providing rehab loans to real estate investors. FAST Closings & No Junk Fees! Phone: 913-563-7170 Fax: 913-563-7179 Web Site: http://www.FortressLending.com/kc

INVESTMENT PROPERTY REHAB LOAN SPECIALIST

FLATIRONS FINANCIAL, INC

EMAIL: SALES@FLATIRONSFINANCIAL.NET PHONE: 913-393-2448 or 866-393-2448 www.FLATIRONS.LENDINGSTATION.COM Ask us about MAREI membership reimbursement with your loan!

Yellowletter.com Inc.
John & Donna MacNeil
Originators of the Yellow Letter Marketing System

Yellow Letter Automated Mailings

JEFF BASLER PORTFOLIO MANAGER O: 816-474-0010 C: 913-568-9344 F: 816-474-0016 FOR TURN KEY RENTAL PROPERTIES CONSISTENT CASH FLOW & APPRECIATION WWW .JBFUNDINGLLC.COM

Phone: (904) 880-2742 Fax: (904) 880-2741 Email: dmacneil@yahoo.com Website: yellowletter.com

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MENTORSHIP PROGRAM
REAL ESTATE INVESTING
WE GUIDE YOU EVERY STEP OF THE WAY
♦ ♦ ♦ ♦ ♦

We mentor new investors and teach you no money down investment strategies and techniques. How to locate your property at 20% to 40% of value Take you step by step through Subject to / Rehab process The basics in Renting and Contact for Deed Tenancy Help you with your Purchase, Financing, and Rehab of your investments
LIMITED SPOTS AVAILABLE - MUST QUALIFY 620 mid-score - 2 year W-2 tax return—6k min. in assets Per House Contracts - No Up Front Costs WE OFFER OUR REAL ESTATE NETWORK TO YOU Real Estate Services Rehab / Subject to Loans Construction Services Permanent / End Loans Property Management Services WE LOOK FORWARD TO HELPING YOU WITH YOUR FUTURE FINANCIAL SUCCESS 816-453-5532 OR 816-456-1843 pgrace3@kc.rr.com

Patrick and Marta Grace

GRACE REAL ESTATE COMPANY LLC 5545 NORTH OAK TRAFFICWAY #1

REHAB LOAN COMPANY
HELPING INVESTORS GET THE MONEY
√ √ √ √ √

Commercial & Blanket Loans Hard Money Loans Purchase Money Corporation / LLC Loans High LTV Investment Property Loans

√ √ √ √ √

Rehab / Short Term Loans End Loans Lines of Credit Rate and Term Refinance No Seasoning on Title Loans

Call With Your Scenarios and for Qualifications. Quick Closings, Good Service, Good Rates! Pat Grace 816.453.5532 or 816.456.1843
www.MAREInet.com

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Vendor Expo
Each of our General Meetings feature about an hour trade show before the presentation. Please arrive around 6 pm to visit with all of our vendors who have reserved tables. If you would like to have a table at the meeting or would be interested in sponsoring a meeting, please visit the calendar on the MAREI web site for more information. Vendor Tables are $35 for members and $75 for non members or sponsor the entire meeting. Reserve your table through the Calendar online or email us at info@MAREInet.com.

Beth Langston Homefront LLC
Call me to review your portfolio! 200 NE Missouri Rd, Ste 200 Lee’s Summit, MO 64086 816-246-5999 cell Beth@homefrontcapital.com

NEED TO FLIP A PROPERTY FAST?
T.O.T.L. (TOP OF THE LINE) RENOVATIONS
will complete all your rehab needs quickly, at a reasonable price.

We specialize in: • Make - ready • Siding and Windows • Carpentry & Roofing • Plumbing & Electrical • Painting & Flooring • Drywall & Doors • Fences and Decks • Kitchens and Baths

Now Accepting

Call Anthony @ 816-606-0266 or Emily @ 816-252-0095

Major Kitchen & Bath Importer Liquidating Entire Inventory
Starts Wednesday, June 11th - Everything Must Go!
Granite Vanity Tops—from $39! Granite Tabletops—$149 - $499 Granite Sinks - from $69! Table Bases - from $49 Heavy Duty Soaker Tubs - $99! Large Pedestal Sinks - $79! Glass & Stone Mosaics, Porcelain Tile, Wall Safes, Hardware & Much More

All at HUGE SAVINGS! This Importer’s Liquidation Sale will be held at:

Mon. - Fri. 8:00 - 6:00 Saturday 9:00 - 5:00 Sunday 11:00 - 5:00

TILE & STONE
WAREHOUSE
tileandstonewarehouse.com

9821 West 67th Street Merriam, KS 66203 1/4 mile west of I—35

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Opportunity Pounds As Delinquent Mortgages Surge
Donna Bauer ~ The NoteBuyer™ It’s no secret that more and more homeowners are having trouble meeting their monthly mortgage payments. I’ve been singing about the booming pre-foreclosure market for some time now, and hundreds of investors have implemented my system on delinquent mortgages, Note Buying…The Ultimate Short Sale, with spectacular results. The national foreclosure statistics for 2005 are strong indicators of the wealth that awaits investors who understand defaulted notes. According to RealtyTrac™, the number of properties in some stage of foreclosure increased every quarter of 2005 for a year-to-year increase of 25%. The District of Columbia experienced the largest increase (300%), followed by Massachusetts (199%), Connecticut (188%), and Michigan (170%). Even California, with its reputation for wealth and growth, saw an increase of 16%. Will these numbers hold or even increase? It’s quite possible. Ironically, these near-historic levels have come at a time of solid economic growth, low unemployment, rising home prices, and attractive interest rates. If any of these indicators were to turn south, the number of delinquencies would likely increase. Remember that every home in foreclosure represents an opportunity for you to throw a lifesaver to the owner. Distressed homeowners face bankruptcy, deficiency judgments, and ruined credit to say nothing of the loss of their home. Much of this hardship is unnecessary. You can stop the foreclosure and all the grief that goes with it while putting some serious cash in your pocket—a win-win situation if ever there was one. Why Location Doesn’t Matter Fledgling note buyers often worry that their pocket of the country is too affluent to yield a substantial crop of delinquencies. If there is such an area, I haven’t found it yet. The fact is that homebuyers— and their sales agents—tend to seek the most house obtainable. A lawyer can be just as hard pressed to swing the mortgage payment as a factory worker. In times of rising home prices, buyers who anticipate quick appreciation often resort to risky financing just to get in the house: 100% loan-to-value, interest-only payments, jarring adjustables, etc. Sometimes the gamble pays off with a gratifying jump in home value. And sometimes the market hiccups, leaving the owner with elephantine payments on an over-financed property. As we learned the hard way in the stock market, bubbles are made to burst. Who would’ve thought that Massachusetts—heart of America’s upper class—would be home to the second largest increase in foreclosures? It’s safe to say that these days location doesn’t matter. Marketing Manifesto Homeowners in default are looking for a way out and a fresh start. Who wouldn’t want their insurmountable debt erased? But it’s foolish to assume they will beat a path to your door with just a little prodding. Even the world’s most established products and services are aggressively marketed without end. Marketing is absolutely necessary because it works. Why else do we pay twice as much for a bottle of name-brand aspirin? Marketing is not a one-time event. It’s a campaign that grows and adjusts for as long as you are in business. I have developed numerous low-cost marketing methods that have produced thousands of profitable deals for my students and me. If you are not using at least three strategies at any given time, deals that could’ve been yours will die on the auction block. Once your marketing machine is up and running, you will discover that persistence really does pay off . . . big!
Donna Bauer "The Original Notebuyer" Donna Bauer, nationally known as the original NoteBuyer®, began buying discounted notes twenty years ago while raising four small boys. She needed a way to support her family and be a stay at home mom. She was elated when she made $5,000 on her first deal and has not looked back. Donna is the nation’s most recognized authority on note buying and the booming pre-foreclosure market. If you’re looking for high rate of return without the hassles of landlording, Donna’s system for buying discounted notes is your ticket to wealth. And that’s just the beginning! Donna’s exclusive short sale strategies have produced stunning results, time after time, in all areas of the country. But Donna goes beyond short sales and teaches you how to buy the defaulted note from the bank. Without question, buying the note is always the superior strategy. When you buy the note, you become the bank, which means you make all the rules! Once you learn how to buy the note, you will be able to close those “impossible” deals that other investors walk away from. Don’t let common short sale obstacles kill your deals. Buy the note instead! You will Learn How To . . . • • • • • • Purchase notes and mortgages for 40 to 70 cents on the dollar! Find excellent sources of good (performing) and bad (defaulted) paper! Work with distressed homeowners and create win-win solutions! Acquire properties in pre-foreclosure below wholesale! Do deals without using your own money or credit! Purchase notes and real estate in your IRA! Speaking at MAREI’s EXPO 2008 on Sunday the 12th. Visit www.MAREInet.com or page 6 for more info.

www.MAREInet.com

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These are not the only exit strategies, but they are the most common. Different property types are generally covered by different LTV ratios. For instance, private lenders will often look for LTV no greater than 65 percent on commercial property and 70 percent multifamily properties and single family. Theoretically, a lower LTV on a property correlates with low risk. If investors need to get their money out before the loan is paid off, there is the potential to sell the private mortgage to a number of companies that buy them. As always, investors should conduct due diligence procedures before pursuing this investment strategy. Investors should not jump into private mortgage investing without doing research beforehand. This takes real estate experience and knowledge, as does any viable business. There are risks associated with any investment, and investing in mortgages should be carefully examined just as you would an investment in stock or any other investment vehicle. In addition to the typical loan requirements, we suggest a Memorandum of Agreement.

research your titles properly. You should get social security numbers from your sellers, because it can take up to thirty days for the IRS to place a lien on a property. With your seller's social security number your title officer can do some research to see if any IRS liens are pending for that title. Perform due diligence on your tenant/buyers. It is always wise to get social security numbers on your tenant/ buyers. If they damage your property and leave with rent due, a social security number may be your only way to locate them. You can find anyone, as long as you have his or her social security number. When doing your due diligence, make sure you include these steps: 1. 2. Meet with them at their current address, to verify that the information is correct. Verify at least the previous two years of employment and salary. A letter from their employer(s) is an excellent way of doing this. Verify their residence information for at least the previous two years. Again, a letter from their landlord(s) is an excellent way of doing this.

3.

High net worth investors use advisors to help them explore 4. Check their criminal record. You can do this online at new ideas and discover critical solutions. You should alwww.ntnonline.com. ways invest your money with much research as a profesIf your "inside" voice is beating you up - make it stop! sional investor uses. By utilizing an experienced Certified Credit and Finance Coach to assist the process is simple, profitable, and safe. For more information, see Con- Maintain a positive attitude. sumercreditcoaching.com. The greatest predictor of your success is your own self-talk. If you
are hearing that little voice inside (and it's basically beating you up!) well, you're going to need to put a stop to it! A good technique to change your attitude is to write Jerry Clevenger, PhD . down all the negative self- feedback and change it to positive. For example, change "I am so stupid!" to "I am so smart...I am a learning machine!" Once you "Private Lending" have changed your thought, rip up the negative note, and paste the positive note somewhere obvious, like Jerry is a local real estate investor in the your bathroom mirror. Review it everyday. Get sticky Kansas City Market. He was a Wall Street notes and stick them all over your house. You'll need real estate analyst, vice president of a to do this consistently for at least three weeks to see bank’s private wealth management divithe effects. After all, think of how long you have been sion, and has raised and paid back over 36 telling yourself all those negative things! You'll need million collars to private investors. He has been involved in securi- some time to let the positive thoughts push those old ties offerings and has been quoted as a real estate analyst in the negative ones out. “Wall Street Journal”, Business Week”, “USA Today”, and Financial And last but not least...know where your wallet is at all Planner Magazine. times! He is the author of the book “Paths to Prosperity” that is featured on the MAREI web site and on Amazon.com and was featured in the best selling book “Millionaire Real Estate Investor” and has been a featured speaker and trainer at several local Real Estate Training Events. Join Jerry at the MAREI meeting on Tuesday June 10th to learn more about what you should and should not be doing with private lending. More details at www.MAREInet.com or on page 4.

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The Four Fatal Mistakes
The Four Fatal Mistakes that Most Seasoned Investors Make When Attempting To Get A Short Sale Approved by Steve Dillon
Are you one of the thousands of seasoned investors who are having nightmares getting their Short Sale Packages approved? So, why is it so hard to get the bank to do the simple task of reading and responding to fair priced offer? Doesn’t it make sense for them to act QUICKLY? Don’t they lose even more money by waiting 60 days before reviewing the deal? If you have asked yourself any of these questions then I bet your one of the investors that has made one of the four fatal mistakes that makes a Loss Mitigator throw your package to the bottom of a stack files that might be as big as 200 to 300 deep. There are four fatal errors that most investors make when submitting a package to the bank. The first fatal rule is to submit an incomplete package. An investor must know all the critical documents and information that a Loss Mitigator needs to say yes. If all the critical information is in a short, concise and complete package your deal gets moved to the top of the stack of offers and can be reviewed in minutes not weeks. RULE #1 A Complete Package Must Contain The Following Completed Documents: 1) Always use a CLEAN fax cover sheet that contains; a. Your contact info b. The debtor’s name, loan number, and prop add c. The bank’s name, phone and fax number d. The story of the deal Send a Completed Contract (Purchase and Sale) Send an Estimated HUD1 or Net Sheet Send an Authorization to Release Send Loan Product Specific Documents** DON’T send anything they did not ask for (see Rule 2) and their fax number. It should contain the DEBTOR’S name, loan number and property address as well. And finally, it should contain the Story of the Deal. This is HUGE. Most investors miss this small but crucial detail when they send their package or they get it wrong. The story of the deal is NOT about how ugly the house is and they should do the deal or else. The Story of the deal is broken down into 5 sentences. Not 5 paragraphs; 5 sentences. Sentence 1 – The debtor became delinquent because… (The Reason For Default (RFD)) Sentence 2 – The debtor cannot afford the house because… (The reason why they cannot overcome the above RFD) Sentence 3 – The debtor can’t sell for the payoff because… (Validate the LTV issue) Sentence 4 – In the event that the bank needs to gain access to the property for an Appraisal (we secretly mean BPO), feel free to call me at ________________ as the debtor is ___(give reason why the debtor cannot be there) and I will let the Appraiser into the house. (You control the BPO/Appraisal) Sentence 5 – This fax contains… (List the items you are sending to them) What about the Contract, is that important? It most absolutely is. Did you know that Freddie Mac backed loans under Short Sale Review require Freddie Mac Sr. Management Authority if the Buyer of the property is a LLC, Corporation or a Trust? I’ll be that you did not know that. I’ll get to that later. The Purchase and Sale agreement that you use must be in line with the usual and customary Real Estate Transactions that occur in that area. Make sure that the Offer Acceptance section of the contract contains a DATE and TIME. But most importantly, the contract needs to contain a “Short Sale Contingency Clause”.
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2) 3) 4) 5) 6)

This all seems basic but let me show you the difference between a deal that gets ignored vs. the deal that gets assigned immediately. The Fax Cover Sheet is usually overlooked by most investors because they don’t realize what kind of an impact it has when the Loss Mitigator sees the company logo that reads; “Foreclosures-R-Us Inc” or “We Buy Houses LLC” Understand that a Loss Mitigator may recognize this information as an opportunity to negotiate more money from you. Or, as an investor, they know that you are NOT in a rush. If you ARE in a rush, then there must be some financially beneficial reason for this and thus, the longer they wait, the softer you become. So here is an EASY fix. Your fax cover sheet should be void of logos or company names. It should just read; “From the Desk of ___” The fax Cover sheet needs to have your Name, Phone, and Fax number on it. As well, it should contain the name of the recipient

Steve Dillon with 15 years of negotiations, has performed over 8000 short sales worht over $2,000,000,000.00. Steve spent over 12 years working for two huge mortgage companies training Loss Mitigators, developing Loss Mitigation Policies and Procedures, and coordinating with Fannie Mae, Freddie Mac, FHA, VA and various Private Mortgage Insurance companies before coming to the rescue of the people on the other side of those negotiations - THE INVESTOR. Steve wants you to know there are Secrets the Banks don't want You to know! Speaking with Curtis Brooks on Saturday, October 11th at MAREI EXPO 2008. Visit www.MAREInet.com or page 6 for more information.

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“This contract is contingent upon Short Sale approval from all lien holders of record at the time of closing and Buyer’s final approval” Oh yeah, if you send in a Contract that says “CASH OFFER”, be prepared to send in a Proof of Funds Letter. The bank will want to make sure that they are not wasting their time working on a file that you cannot afford to pay for. If you are financing the purchase of the house, then be prepared to send in your Pre-Qual letter. Now that we have the contract squared away, it is time to work up the HUD-1/Net Sheet. Many of you do NOT know how to fill out a HUD-1 Settlement Statement (properly) and that is OK. You can use a Net Sheet instead of a HUD-1. If you fill out the document like most people, then you will probably not HARM your deal. But did you know that there is a way to fill out a Net Sheet that will make the Loss Mitigator WANT to do your deal? The trick is to basically “paint the picture” for the Loss Mitigator. In order to do this, your NET SHEET should also show the Loss Mitigator the projected OUTCOME of an REO Liquidation. This way, the Loss Mitigator can see WHY YOUR OFFER IS SO MUCH BETTER THAN GOING TO FORECLOSURE AND WHY THEY NEED TO HURRY. Now, in regards to sending the Authorization to Release Information, I don’t care that you have already faxed it 25 times to 25 different fax numbers. It is one sheet of paper and it should be included. Just do it. Trust me. For those of you who are advanced in your investing careers, this next section is for you. There are special types of Short Sale Deals that require special handling because of the type of loan that is in default (Fannie Mae, Freddie Mac, FHA, VA, Conventional with PMI, Pooled Loans, Securitized Loans, etc). If you know that you are working on an FHA deal; then make sure to include the 90036 and 90038 FHA forms. If you do that, you will move your deal to the top of ANY Loss Mitigator’s pile. They will immediately recognize that you know how to make their job easier and are going to WANT to work your file. If you don’t know what these forms are, don’t worry. The bank will send them to you to get completed. Then, the next time you have one, you will know. What about that Freddie Mac thing? Well, if you are buying the property into a Corp, LLC or Trust, then you need to know the LOAN PRODUCT before you send the offer. Otherwise, you could be killing your deal before you get started. There are some other LOAN PRODUCT SECRETS that you probably did NOT know. Did you know that the VA will not let the bank sit on a file and wait for 60 days? Did you know that Fannie Mae has its own Loss Mitigation shop and will also expedite files? Did you know that Private Mortgage Insurance companies also expedite files? Did you know that the approval % for FHA is much lower than 82%? And finally, don’t send things that they did not ask for which leads us into RULE 2. RULE #2 A Short Sale Package Should Never Be Overwhelming It is OK to send a couple of extra documents that are pertinent to the initial review. But you should not send in your whole file. In other words, hang on to those Contractor Estimates. Hold on to those Inspection Reports. There will be a time to send those into the bank but NOW is not the time.

Many investors think that if they send a 102 page fax covering every single detail and answering every possible objection that a Loss Mitigator might have, that they will win the respect of the Mitigator and/or leave the Mitigator no choice but to concede. This strategy does not work. Rather, most Mitigators look at a file like that as a “Problem Child”. That file looks TOO COMPLICATED to be a slam dunk deal. I mentioned that my net sheet shows a comparison to the bank; Short Sale Net vs. REO Net. If there are repairs, then the repair cost will be reflected in that sheet. If there is a disclosure issue (Toxic Mold, Sink Hole, 67 Cats live in the house and there’s only 1 litter box, etc) then I list that on the Fax Cover (sentence # 3). Trust me, there are very few scenarios that the bank has not already worked through. Your situation may be unique to you but most Loss Mitigators have dealt with a house like the one you are trying to purchase at some point in time in the past. OverValidation raises a cautious eyebrow. RULE #3 The Story Doesn’t Make Sense So many deals sit on the shelf because the Mitigator sees through the LIES that the investor is telling. Yes, the Loss Mitigators have ways of gathering information. I have seen so many deals come in wherein the investor/buyer tells a lie in the very beginning; “The debtors do not have a job, nor do they have a bank account, nor have they filed tax returns for the last 2 years. Because of this, the debtors have left town and are nowhere to be found. But, right before they left town, they signed a Power of Attorney that will allow me to purchase the house.” Don’t laugh, not only have I seen this (a lot) as a Loss Mitigator but I have seen people TEACH THIS TACTIC!!!! First of all, most banks have already been in contact with the debtor long before you ever talked with them. And even in cases where they are not in contact with the debtor, once they pull a Credit Bureau Report, they will see through this lie. The bottom line is that the debtor will need to be a part of the Short Sale deal. They will need to submit Financial Disclosures at some point in time to validate their inability to afford the house. If you are working on a file where the debtor CAN afford the house but just chooses not to, then you need to know that you CANNOT use the word “SETTLEMENT” anywhere in your documents. In fact, the term “SHORT SALE” should not be used either but rather, you should use the term “Partial Release”. This is Loss Mitigator terminology indicating that the deal will NOT satisfy the debt but rather just release the lien for the negotiated payoff. RULE #4 Know Thy Product If you know absolutely nothing about FHA, VA, Fannie Mae, Freddie Mac, Conventional Uninsured, Conventional with PMI, Pooled Loans, HELOC loans, etc; then you will have some experiences where you are doing everything right, making a perfect offer, and still the Loss Mitigator tells you, “NO DEAL”. Did you know that you could make an offer to the bank for 100% of the VALUE of the house (still less than full payoff) and the bank would be justified by rejecting your offer, taking the house through foreclosure, and then only getting ½ of that from an REO???!!!! Well it is TRUE. This is all because of loan product. What is happening behind the scenes at the Loss Mitigator’s office is a mystery to most investors but once you know that inside information, it becomes crystal clear. And once the Mitigators recognize your ability to work with them through these issues, they will bring deals to you!

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Investing in Multi-Family Real Estate Makes Greatest Financial Sense
Given the current climate over real estate you’d be bang on the button if you started to ask the smart questions. The smart questions of course have to do with choice, like should you be choosing to invest your money in singlefamily homes or should you go into multiple-family properties. I’ve made a fortune doing the latter so you’d expect me to be biased about it but I am not. When it comes to making money I am always open-minded and it is always good to examine trends and weight things up in a matter-of-fact way because then the judgement made is more objective. Objectivity is highly prized particularly when you are looking for a way out of the rat-race, so let’s go to it. Over the past few years anyone who bought a singlefamily house on either coast has seen a handsome return for their money. This is because prices have been increasing at a double-digit rate leading to some serious appreciation and equity build-up. As of December last year things changed. We are now in what is going to be, by all forecasts, a prolonged period of either static or dropping property appreciation and this means that putting your money in a single-Family property is not going to be the smartest investment decision of your life. Which leads me, naturally, into the appeal of multi-Family properties. In the eyes of most real estate investors the perceived drawback of a multi-Family property is the fact that you will have to deal with tenants (and the issues of the blocked toilet drain in the middle of the night) and have far more complicated book keeping to do than with a single-Family property. business exactly because you want to be free from the rat race routine and desk slave mentality not because you want to replace one with another. If you are ready to truly shed your desk-slave chains and stop working nine-to-five for peanuts then you will have to start thinking about getting into the multi-family real estate investment market and become owner of properties which generate cash for you month after month irrespective of whether you are in town doing some work or have hit the slopes at Aspen for some serious skiing and much needed R & R time.

Dave Lindahl "Apartment House Riches"
In a very short, life-changing 18 months, David was able to go from being the broke owner of a struggling landscape company, working night and day just to pay his bills, to creating a monthly positive cash flow of $9700 that comes in month after month like clockwork, whether or not he decides to mow any lawns, rake any leaves or even get out of bed!

David will share with us how for the same amount of time it takes to do a single-family deal, you could have done an apartment complex (small or large) and made up to 20 times the profit! Find out Dave's techniques for: • • • Buying Apartments with No Money Down (you know OPM) Understanding Real Estate Market Cycles so you know what areas to buy, and when to sell to make the best profits. How to Manage Properties Without Ever Dealing With Tenants! How to find the Apartment "Gems" in Your own Back Yard that Others Miss. The Truth about Tough Neighborhoods and Dealing with Tenants with Drugs on in Gangs!

As a man who became a millionaire out of doing • business with just this kind of property I can tell you that your fears here are unfounded. I have • more than 4,000 apartments in eight states I own and I do not meet or deal with a single tenant. • Nor do I spend my entire day dealing with book This is an excellent opportunity for you to expand your portfolio to keeping. include multifamily and for those who want to start big and bypass the small stuff, Dave's information will put you way ahead of your compeThe reason I don’t is because I believe life tition! should be enjoyed and in order to do exactly this I have devised a system which allows me to run Speaking at MAREI’s EXPO 2008. Visit www.MAREInet.com my properties and take care of my book keeping or page 6 for more info. without having to be chained to them. After all let’s be clear about one thing: you are going into this

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Mid-America Association Of Real Estate Investors
Building Networks for Success!
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Network Online

General Meeting
Overland Park Marriott 10800 Metcalf Just south of I435 Tuesday June 10th, 2008 Private Lending Do’s and Don’ts With Jerry Clevenger Registration, Networking, and Vendor Trade Show open at 6 p.m. See page 4 for more information.

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Do you have a real estate related question? Looking for Contractor Recommendations? Have a House to Sell? Looking for a House to Buy? Want to see if some scheme sounds illegal? Need to connect with Kansas City Metro Investors?

Join our yahoo group: KCREI sponsored by Mid-America Association of Real Estate Investors. We have about 800 members, with a large percentage of them very active every week. And many members are from out of state. Go to www.MAREInet.com and look for the “Yahoo! Groups Join Now!” Button at the top—similar to the one above, click and join. You will need a yahoo email and password and it make take a day or two for your membership to be approved. We do moderate to keep postings on topic. You can choose to set up your membership to receive every message post individually, or once daily, or never. For the never choice, you must log in

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