Page222 Page Page Page 2
RE Investment News Grow Business REYour Investment News Grow Your Business
MAREI.org MAREI.org
Page33 Page
Dan Krupa and his wife Michelle had been investing in real estate off and on for 10 years. They had dabbled in long distance buy and hold, they had Bought-Rehabbed-Rented-Refinanced, flipped, house hacked, got taken to the cleaners by a couple of property managers and then decided to leave their W2 jobs and start a full time real estate investing business. They started with both of them getting a real estate license in Missouri and making the decision to focus on flipping houses to generate capital. Here we take a look at their first steps that others may find helpful in their process. Getting a Business Name They brainstormed and picked out two business names that they liked and were available on GoDaddy.com to purchase as a domain name. They turned to friends and family to vote on their two names and their favorite won out. They bought the domain name for their business on GoDaddy.com
Page 4
Then they went to 99designs.com to get a logo crated. At the time it cost $300 and they got a great logo sent to them in eps format (eps is used to place your logo on flyers, door hangers, signs, magnets, etc..), jpeg, tiff, etc... Setting Up the Business Next they took their name and formed an LLC. They did this through a local lawyer who speaks at the local REIAs, deals exclusively with real estate, and came recommended. LLC creation rules vary by state, I recommend you pay the $500 and use a lawyer. Also, don't be confused. If you are flipping you will create an LLC then your CPA will file a letter with the IRS to make your LLC an S Corp but it will only be an S Corp in the eyes of the IRS. It is an LLC for all other intents and purposes. Have your CPA file for your S Corp status if and only if you are flipping or actively working in real estate. We elected S-Corp because we both became agents and we are flipping. Ask your CPA why.
Grow Your Business
Starting their Marketing
are alerted immediately.
Set up a google phone number. This gives you a local number if your cell phone isn't local, the ability to screen calls and to have a voice message translated into an email and sent to you. Plus, it's free. Thanks Google! (I know Alphabet Corp is slowly taking over the world but I am slightly ok with it....I digress)
Don't ignore auction.com and courthouse auctions. There are still good deals out there if you know how to look and aren't afraid to go to an auction. (Some municipalities no longer do courthouse auction. My county and the surrounding counties still do)
Create a Facebook page. This is the minimum via social media I would do. Twitter, Google Business Page, etc...be creative. Get yourself out there. Be known! Business cards were ordered. Use Moo.com or Vistaprint. They always have good deals going on. Make sure your logo and name are both in large print. Again, sell yourself. Create your website. Do it yourself using square space or wix or pay someone to do it. Please don't use WordPress - you aren't hosting a blog. However, ensure your website can post blogs you write, photos and videos of future flips, testimonials, and a place where people who want to sell their house to you can leave their information. (The marketing machine you create should be leading people to your website. It needs to shine. It should look new and professional but doesn't need to cost 5k) Start Building Your Team Build your team. Throughout this entire process, you should be meeting with people in your area who are involved in real estate investing and you should be networking. Go out and meet: agents, general contractors, other flippers, lenders, etc... Go to your local REIAs. Put yourself out there. Tell people what you do. Hustle. Most importantly - be collaborative! Personally, I think if you are doing this solely for the money and nothing else you are in the wrong business. Purpose is good for both business and the soul never forget that. Find a Deal Start hunting for deals. You can use a wholesaler, find an agent who works with investors or hunt for deals yourself. We are doing a combination of all three. Get a local agent! Some local agent should know what your property criteria are and have an alert set up for it. Any new house that comes on the market that meets that criteria are automatically emailed to you. Example: a 3 bed/2 bath, 1100+ square foot home in the 55555 zip code under 140k. That meets your criteria and you
MAREI.org
Placing signs (not bandit signs) in yards and magnets on our vehicles. Print out flyers to put on doors in target neighborhoods or direct mail the neighborhood with Every Door Direct Mail from the US Postal Service. Use Driving for Dollars, to get addresses of rundown houses and then cross referenced with the county tax assessors site and then direct mailing the owners. When direct mailing, don't use list source or any other list readily available to purchase if you are in an area with a lot of other rehabbers. Create your own unique direct mail list. Use driving for dollars or here I found a local company that will create a list based on credit scores and other criteria not available on listsource.com. Don't be afraid to experiment. Learn Your Market and Make Offers Start getting to know all the homes for sale in your farm area. What features do they have, what are they selling for, how fast do they sell, etc... Tour as many as you can. Be willing to make some embarrassing offers. If the seller doesn't want your offer they will throw it out but have the seller make the determination. Don't talk yourself out of a possible deal. Stay focused! There are a lot of shiny objects in real estate. Don't get distracted. If you want to flip, flip. If you want to buy and hold multis, do that. Figure out your niche and stick to it until you master it. Understand you are going to make mistakes and that is part of the process. Don't beat yourself up. Learn from it, don't repeat them, and get back out there. Have goals and review them daily. Nothing will push you like a goal and a self-imposed deadline. Best of luck to you!
Page 5
Page 6
Grow Your Business
MAREI.org
Page 7
Want to pump up your investing? Consider learning more about Self Directing. To give you a few ideas, we have turned to a few case studies you can find on Equity Trust’s website www.TrustETC.com. 19-Year-Old Investor Turns $10 into $4,800 for His IRA Ryan of Maryland recently completed his first self-directed real estate investment – one that earned him a nearly 48,000percent tax-free return. It’s a great start for any investor, but especially one who completed the investment when he was 19. He grew up in his father’s real estate rehab and rental management company to make sure that's what he wanted to do, becoming a full-time employee after graduating high school. At a seminar he learned about selfdirected accounts and opened a Roth IRA. In one deal, Ryan found a local homeowner who was underwater on their property and offered to help them get out of their mortgage by finding a buyer. Ryan offered a real estate option for $10, which allows him the opportunity to find a
Page 8
Grow Your Business
buyer or purchase the property. He ended up finding a buyer who purchased the option from him for $4,800 – a return on his investment of nearly 48,000 percent. The purchase was completed approximately two months after he entered into the agreement.
One concern, however, was that there wasn’t enough money in his children’s accounts to invest in any real estate opportunity he might find.
Mother Bonds with Teenaged Son over SelfDirected Real Estate Investing – Earns 13% Annual ROI
Brian learned he could include his children’s accounts in his real estate investments to grow the accounts for their future education needs. An active real estate investor, Brian decided to try to grow his children’s savings using self-directed CESAs.
Carmen, a real estate agent, often talked to her sons about financial literacy and real estate income as a way to secure their financial future. She was thrilled when her oldest son took an interest in real estate and began to talk to her about building passive income through real estate investing.
A CESA’s annual contribution limit is $2,000. Brian was concerned that it would take a while to build up enough capital in the account to be able to invest in real estate. His purchasing power increased when he learned that he could partner with other self-directed accounts to make investments.
Carmen wanted to encourage her son’s interest by showing him a real estate investment close-up, but she was short on funds to make an investment. Soon after, another real estate agent told her she could use her retirement account to invest in a variety of assets including real estate. A self-directed IRA or other account at a custodian such as Equity Trust made such investments possible. Carmen decided to roll over her 401(k) into an Equity Trust IRA.
Brian thought it would be difficult to find a suitable investment property for less than $50,000 in the city of Nashville, but before long he found a vacant lot in the city for $8,000. He partnered three of his children’s self-directed CESA accounts to purchase the lot. One child’s CESA invested $4,000, and his two other children’s CESAs each invested $2,000. The land was sold 60 days later for $60,000. The sale proceeds returned the CESA accounts in the same proportion as was used for the purchase.
For her first self-directed investment, Carmen’s IRA purchased two duplexes near a local hospital. Her initial investment was $110,000, plus the cost of updates, which included new roofs and windows. All expenses related to the property must come from Carmen’s IRA, per IRS rule. The rent was around $500 per unit when she purchased the properties. The duplexes already had tenants, who were able to stay in the units during the updates. And after some research, she decided she could charge as much as $620 per unit once the updates were completed, bringing the rent more in line with the regional average. This income will bring her annual return on investment to 13 percent. With the initial self-directed investment experience completed, Carmen is on a roll. She added units to her portfolio and is now receiving income from six rental units. Her goal is to accrue enough rental properties in her portfolio that she can receive $10,000 per month in passive income back to her IRA. 2 Investments Earn $130,000 in Profits to Help Boost 5 Self-Directed Accounts When Brian from Tennessee learned that he could self-direct his retirement account and his children’s education savings accounts into alternative investments such as real estate, he was eager to begin.
MAREI.org
After the lot sale was complete, the CESAs had a combined total of approximately $60,000. Brian began to look for a larger investment, where he could again partner the accounts together. He found two adjacent lots, one of which included a dilapidated house. For this investment, five accounts partnered in equal proportions to produce the $120,000 purchase price: his Roth IRA, his wife's Roth IRA, and three of his children's CESAs. He divided the two lots into three and put it back on the market for sale. A year after purchasing the land, he sold all three lots for $200,000 to a developer who wanted to build homes on the site. The profit went back into the accounts in the same proportion it came out of the accounts. If you want to learn more about Self Directed accounts we suggest visiting Equity Trust’s website and exploring. Once you know the basic rules you can conduct almost any type of real estate transaction with in a Self Directed Account or you can lend your account to others for their investment and teach others about Self Directed Accounts so they can lend to you. We will be discussing Self Directed Accounts more at the October 8th MAREI meeting, please join us.
Page 9
Page 10
Grow Your Business
Do You Play the Game of Survivor with Your Sellers?
I have…and I didn’t like it too much.
courses I have read would have you believe your primary job is to outsmart these sellers and make deals in some sort of an adversarial relationship where the seller winds up taking a bath. Your negotiating skills must be constantly sharpened and honed in order to get already beaten down sellers to do things that they really have no desire to do all purely in the interest of saving their credit or avoiding foreclosure.
It probably isn’t your fault…I certainly don’t think it was mine. My nature is not to be heartless and cutthroat. It is most likely just the way we’re taught to “be” in the investing game.
I am here to tell you that your job in all of this will be much easier, you will be much happier and you will last a lot longer in this business if it’s not like that. And it really doesn’t have to be.
After all, as an investor, our job is to get the best deal possible and I find that with most investors I meet, there is usually not a lot of regard for the situation the seller is left in.
But wait... we have new investors who are taught what I call the “win/ win” myth and they base their approach with sellers on the ridiculous notion that even though it’s investor vs. seller, dog eat dog out there, they have to box it up, paint it up or wrap it up and present it so that no one will ever notice or suspect they are the ones walking out the door with all the marbles in their pockets. I am telling you to forget all of that.
Do you feel like your job as an investor is to outwit, outlast and outplay your real estate sellers? Ever felt like a “predator” as a real estate investor? Especially when dealing with distressed sellers. Ever been called one?
Most new investors assume, as they are usually taught, that they will have to virtually come out swinging, practically doing battle with the real estate sellers they make contact with who are in trouble and that they will have to beat them down in order to put deals together. A lot of real estate investing MAREI.org
What I want to share with you today is that your job in all of this is NOT
to be suiting up for war with desperate, down on their luck, no place else to go sellers, because this is a war that’s best fought with those same sellers completely on our side. How many more deals can you do if the seller is your partner in this? Now I am not talking about an actual business partner but someone working with you, wanting you to be successful, too. A partner in the sense of helping you to get things done. Someone actually wanting you to succeed. Once I learned this approach and changed my way of thinking, my ability to get deals that otherwise wouldn’t have been “gettable” skyrocketed. What is the approach? It is actually pretty simple. It is all in the presentation. When I lived stateside, I was a doorknocker. I loved to take that Saturday and head out to those properties that had older loans on them and knock on the doors getting to the sellers days before the “scared guys” cards or letters showed up. Door knocking let me put together deals I could have never gotten had a just mailed out and since these
Page 11
deals were the ones with old loans, the profits were the most handsome, too. How you present at the door makes all the difference in being perceived as a predator or a knight in shining armor to these people. And it isn’t just a matter of saying the words… you have to mean it. When they opened the door, I said, “Hi, Mr. Smith?” If he confirmed he was, indeed, Mr. Smith…”My name is William Tingle. I am here because I understand your bank is trying to take this house away from you and I would like to see if I can help you stop that from happening.” I didn’t say anything about buying the house. I didn’t mention foreclosure, divorce, tax liens or any of that. I said I was there to see if I could help. Now, will all sellers be savable? No, they won’t. You and the seller will come to that understanding while you are sorting everything out. But some will and for those people you WILL be a hero. To others that you can help by buying their house, you are still a hero for trying. You offer yourself as the seller’s “knight in shining armor,” and the only fighting or negotiating you want to do is with anyone and everyone who is out to get that seller. As a potential hero, he will be your partner in all this and it will be your job as resident knight in shining armor to protect him and get him to wherever it is he’s hoping to go after all the dust settles. He is in a crisis situation with his financial wellbeing under attack, the dragons and black knights are surrounding him and it is your job to assist him in defense of his real estate assets and minimize the damage from the attackers at all costs. Do we fight? You better believe we do! Do we fight real estate sellers? You better believe we don’t! Our job? “Knight in shining armor.” Our role? Defender of sellers’ financial wellbeing. Our fight? Stopping cold anyone and everyone attacking our seller.
Page 12
Understand this. You can get unbelievably wealthy as a real estate investor and you don’t have to outwit, outlast & outplay sellers while you make off with their last dime of equity to do it. That’s a terrible way to do business and not a profession I would want to claim. Instead, refuse to take on any role other than the hero. It is your job to save the day by using your skills, resources, and know-how to effectively protect the seller from anyone or anything that has him in peril. Yes, we do battle, but we do so strictly as knights in shining armor on behalf of distressed sellers who are facing financial destruction. And when it’s our turn to act, we step up with colors flying and save the day . . . just like any hero should. Forget any ideas of negotiating adversarial relationships. Forget trying to outwit, outlast and outplay sellers who are so distracted by their situation and wouldn’t know enough about real estate investing anyway for it to be considered anything near a fair fight. I spent years being taught that being a successful real estate investor meant being able to trick people into giving me great deals to the point of feeling a bit like a con man whose job it was to pull the wool over their eyes to make it happen. Trust me, doing business that way is no fun at all. These days, I take pride in my job as a “knight in shining armor”. There is not much that feels better than showing up at just the right time, saving the day and having my seller walk away with his dignity and sometimes a nice chunk of cash that would have otherwise been lost to those nasty dragons and black knights. There is nothing like having a distressed seller, someone who has been beaten black and blue not only by the banks, lenders or other enemies but by a few of the “predator investors” tell me, “Thank you! I don’t know what we would have done if you hadn’t called! You saved the day!” Awe shucks…just doing my job. Where else can you make an obscene profit AND be thought of as a hero by the person paying you?
Working with sellers in trouble is much easier than trying to make something happen that does nothing to further that guy’s situation or put him in a better place than if he would have let the house go. If he believes we’re just another enemy there to steal his house, it’s going to be tough to get him onboard. However, when he understands our job is to take this losing situation and turn it into something that we can both profit from, then all of a sudden we’re on the same team with each of us focused on one common goal . . . making the bad guys go away. And when that happens, the potential for profit increases greatly! Battles are fought and won . . . but we never fight them against real estate sellers in trouble. You want these people to think of themselves as your partners in this battle and when we arrive on the scene with swords drawn and colors flying, they are the very people who want nothing more than to see us make their troubles go away . . . and if you know how to get things done, they will pay you handsomely for doing so. Remember, you’re their knight in shining armor, riding alongside them and defending them even when under attack from all directions . . . and that’s what this type of investing with distressed owners is all about. The focus of this article today was YOU, your role and the fights you should be facing as a real estate investor dealing with distressed owners going forward. I suspect this is a new and different approach than you have probably ever heard of before. One to which you’ve likely never been exposed but one you must understand thoroughly before meeting with your next distressed seller. Starting today, I want you to think of yourself as a knight in shining armor, not a predator real estate investor. Would you like to learn how to buy houses subject to and save the day for your seller at the same time? Join me in November at MAREI. William Tingle www.Sub2Deals.com
Grow Your Business
With MAREI Business Members Save time and money by starting with service providers who already know your business. Who can solve problems as they arise to help you get the deal completed on time and for maximum profit. Accountant
Building Supplier
Contractor
Coleman Accounting Service Bob Coleman www.ColemanAcctg.com 913-787-0308
Coronet Window Company
Appraisal
DeMayo Enterprises Wholesale Cabinets Mark Yanda www.DeMayoEnterprises.net 913-980-4260
Above & Beyond Building Services James Carollo www.AandBKC.com 816-674-6132
Ladys Appraisal Service Kathy Allen-Grey www.LadysAppraisal.com 816-678-2794
Attorney Anderson & Associates Julie Anderson www.MOKSLaw.com 816-931-2207 Rick Davis Legal Rick Davis www.RickDavisLegal.com 913-283-8300
Auction Company Auction.com Rachel Bailey www.Auction.com 816-797-6875 Monthly Auction 101 Workshop
Brent Huckabey www.CornonetWindow.com 816-472-1788
Earthwise of KC James White www.EarthwiseKC.com 816-231-7011 Joe’s Carpet / Weber Flooring Joe Weber www.WeberFlooring.com 913-469-5430 Rugs, Rolls and Remnants Jerry Ratway www.RugsRollsRemants.com 913-593-0568
FlipperForce.com Rehab Analysis & Management David Robertson (816) 559-1782 Hearth Masters Fireplace / Masonry Gene Padgitt www.ChimKC.com 816-461-3665 Genesis Home Restorations Mold Remediation Terry Amerine GenesisHomeRestorations.com 913-270-0812 HCS Restoration KC, LLC Mike Peace HCSRestorationLLCKansas.com 913-731-6537
(Continued on page 14)
MAREI.org
Page 13
NuLook Custom Finishes Cabinet Refinishing Carol Baldwin www.NuLookFinishes.net 913-385-2574
Flat Branch Home Loans Morgtgage Banker Beth Langston FlatBranchHomeLoans.com 816-479-5841 x 1148
REIPro
Under Pressure Property Services Rehab, Maintenance, & Staging Dallas Kidd www.MyUnderPressure.com 913-274-9555
Gateway Mortgage Group,
Odor Removal
Financial Planning
Investors Choice Funding Hard Money Bob Woelfel InvestorsChoiceFunding.com 317-205-4797
TR Bass Financial Terry Bass 816-251-4524
Forms EZ Landlord Forms www.MAREI.org/Forms
Home Warranty Choice Home Warranty Jayme Dickey 816-550-5144
Insurance Agema Insurance Fred Dickinson www.AgemaIns.com 913-543-8116 Arcana Insurance Insurance for Investors NREIA.ArcanaInsurance HUB.com 877.744.3660
a division of Gateway First Bank Mike Leech GatewayLoan.com/Mike-Leech 913-802-5015
Lima One Capital Tracey Vinzant LimaOneCapital.com 913-671-0040 Merchants Mortgage Mushy Money Susan Aubin www.MerchantsMtg.com 303-514-0815 North Oak Investments Hard Money Tommy Nigro www.NorthOakInvestment.com 816-249-1001 REI Investor Funding Charlie Fitzgerald www.REIInvestorFunds.com 913-843-8650
Investor Marketing Platform Lists : Direct Mail : CRM www.MyREIPro.com/NREIA Discount Code 66209PRO
OdorXIt www.MAREI.org/OdorXit
Office Supply Office Depot / Office Max www.OfficeDepot.com Discount Link & Card in Member Benefits Package
Pest Control BedBugTraps.com Stop Bed Bugs Discounts for Members
Private Lending Free Online Training Alan Cowgill www.MAREI.org/PL
Properties KCInvest Investment Properties Scott & Kim & Don Tucker www.KCInvest.com 913-735-0018
Pride Properties
Brian Rauber Insurance Agency Farmers Insurance LoveIsOurPolicy.com
Wholesale Marcus Bray & Matt Bray www.PridePropertiesHomes.com 913-213-5370
(816) 436-1016
Worcester Financial Hard Money Taryn Kendrick www.WorcesterFinancial.com 816-291-4146
Self Directed IRA
Marketing
Property Investors Inc.
Equity Trust Company TrustETC.com/NationalREIA FREE Training 844-732-9404
3 Leads Per Day
Lending
InvestorCarrot
Crossroads Investment Lending Hard Money Bekah, Brant, & Britton www.KCLend.com 913-800-8226 House Traders Monthly Meeting
Page 14
Online Marketing Training from Investor Carrot www.MAREI.org/3Leads
Deal Makers Monthly Meeting Todd Franzen & Chris Hellums www.MyPropertyInvestors.com 1-800-614-7705
Property Manager Home Rental Services
Websites for Agents & Investors Online Marketing www.MAREI.org/InvestorCarrot
Paul Branton www.Home4Rent.com 913-627-9543
PropStream
M & M Property Pros
Build Marketing Lists & Research properties www.MAREI.org/PropStream
Michael & Michele Belman www.MMPropertyPros.com 816-490-6745
Grow Your Business
MRE Property Management Turn Key & Management Nick McKinnis www.MREKC.com 816-388-9588
SG Property Management Randi Fiedler www.SGPM.us 913-717-8531
Realtor Collins Cook Realty Christina Erickson-Hoffman CollinsCook.com 816-865-5932
Crown Realty Rich Melton RichMelton.CrownRealty.com 913-215-9004
Get Connected: www.MAREI.org
Visit our website for events, recent newsletters, member properties and our business directory. www.MAREIMember.com Visit our Member’s Only site to join, register for events, access benefits and discounts and to post properties. www.Facebook.com/groups/KCREI Join the online discussion. Post a property, ask a question, share knowledge and expertise. 7000+
Residential Assisted Living Free e Training www.MAREI.org/RAL
Screening Rent Perfect Tenant Screening Plus Heather Johnson www.RentPerfect.com 877-922-2547 Discounts www.MAREI.org/RP
Title Company Accurate Title Company Dave Green www.AccurateTitleCo.com 913-338-0100
Trash Out 1-800-Got- Junk Trash Pick Up www.1800GotJunk.com Discounts in Member Benefits
Get Listed For as little as $135 a Quarter or $499 annually, join MAREI as a business member. Details at MAREI.org.
MAREI.org
Page 15
