MAREI December Newseltter

2 0 2 1 D E C E M B E R

MAREI

MID-AMERICA ASSOCIATION OF REAL ESTATE INVESTORS

NETWORKING OFFERING A WEALTH OF OPPORTUNITY TO CONNECT

EDUCATION FROM MEETINGS &

WORKSHOPS TO

ONLINE RESOURCES

DISCOUNTS FROM LOCAL AND NATIONAL VENDORS

TO SAVE YOU MONEY

FROM

TOYS

FOR

TOTS

My name is Kelley Hardison, and I’m the Deputy Vice President of the Marine Toys for Tots Foundation. I wanted to take a moment to reach out to you and personally ask for your help.

Many American families are still struggling to make ends meet, and we’ve found ourselves overwhelmed with last-minute requests for toys this Christmas.

It’s heart-wrenching to hear from so many parents who won’t be able to provide even one Christmas gift for their children this year without our help — and yours.

Many people are doing their Christmas shopping online again this year, so our iconic white collection boxes are sitting half empty. Earlier this week, I volunteered at a local Toys for Tots warehouse and was saddened to hear that the number of toys being dropped off is currently significantly lower than in years past. We’re determined to make up the difference with support from caring friends like you.

I’m hoping you can find it in your heart to help struggling families by donating to our virtual “Fill the Box” Toy Drive — because hope is only one gift away for a child in need!

So many hopeful girls and boys are counting on us — and YOU —for Christmas.

Please give now if you possibly can.

Thank you and Merry Christmas,

Kelley Hardison, Deputy Vice President Marine Toys for Tots Foundation

DONATE TO MAREI'S VIRTUAL "FILL THE BOX" TOY DRIVE AT

MAREI.ORG/TOYS GOAL $5,000 IN CASH & TOYS STAND AT $1,602.10 IN CASH 2 BOXES OF TOYS NEED $2,500 MORE

what's coming up 11

January 11th MAREI Meeting, How to lose your nest egg in 3 easy steps.

Learn what not to do as a Private Lender with our special member guest panel featuring: Susan Aubin, Jeff Newhard, Bruce Belanger & Rachel Bailey. Possible Workshop on Private Lending January 15th or 22nd.

08

February 8th MAREI Meeting, Fixing and Flipping Properties for Profits in the New Normal with the undisputed Queen of Rehab, Robyn Thompson. In Person

19

February 19th & 20th, the Queen of Rehab is back to share her wisdom on Turning Foreclosures, Estate Properties, and Unwanted Houses into Fast Cash through Fix and Flip. Also learn how to Cash Flow with Pretty Houses & Airbnb Rentals.

See MAREI.org/Calendar for more events across the Kansas City Metro from the local landlord groups and events hosted

by MAREI Members.

MAREI Staff Chapter

Executive Director

Newsletter

PartnerCast

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Kim Tucker: Kim@MAREI.org - 913-815-0111 Staff: Newsletter@MAREI.org - 913-815-0111 Idea for a Partner Cast or Meeting - email Kim Julie Anderson-Clark: Julie@MOKSLaw.com Rick Davis: RDavis@LevyCraig.com

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Mid-America Association of Real Estate Investors is a trade association dedicated to promoting ethical real estate investing and to protect and promote the best interest of our membership through educational and networking opportunities as well as community, legislative and public relations.

MAREI does not exist to renter and does not give legal, tax, economic or investment advice and disclaims all liability for the actions or inactions taken or not as a result of communications from or to its members, directors, contractors and volunteers. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment and related matters concerting their business.

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Content Disclaimer The views and opinions expressed by authors of articles contributed to this newsletter do not necessarily reflect those of the association, the director, or the staff.

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Guest expert ERIC LUNDBERG Milwaukee REIA

HOW TO LOSE YOUR IRA IN 3 EASY STEPS Picture this: It’s 2004. I’ve just returned from the OREIA (Orlando REIA) investors conference held each year.

My car was full of new investor courses (I was gonna be rich!), and my wallet was full of business cards from investors I’d met who wanted to do the same.

Seems like a recipe for success, right?

I started applying what I learned in those courses and started buying houses, BUT, I also started lending my IRA funds to some of those same investors I’d met.

This is where the story turns bad.

I didn’t have any experience lending, and I didn’t buy a course on lending - I just started doing it. I did have experience borrowing by that point, and I just figured everyone was like me (hint: this is a mistake we all make when dealing with other people - it’s called projection) If you don’t know where this story is going yet (read the subject line LOL), you will shortly- but let me explain, we borrowed this story from Eric Lundburg with the Milwaukee REIA, he was hosting a REIA meeting with a guest speaker teaching all about how to properly lend to, or borrow from, people.

We are hosting a similar meeting in January and we found this story to be very eye opening when it comes to properly lending to or borrowing from people. #1 Lending to the WRONG PEOPLE Backstory: I met a guy at the conference who had been investing for a couple of years. He was working with private lenders in Ohio, and with rates and fees, he was paying about 12-15% of each deal in lending costs. He was buying about 5 houses a month right off the MLS and reselling as many each month for an average of $25k in profits after about 4 months of work and holding time.

Did I check and see if he was bankrupt? No. I could answer “No” to a lot more questions, but you already know that I was shooting blind on this from the beginning.

Be sure to join us in January to find out what you should be learning about your borrowers before you consider lending to them. #2 Lending on the WRONG PROPERTY

His challenge was that he couldn’t get his funds quickly enough. Buying a house a week is a real business - and since he was turning them so quickly, I thought we could create a win-win.

Rather than a traditional loan where you lend against each property, I thought it was a good idea to lend against his business and secure it by his private residence. It was a bad idea. Terrible actually - here’s just a couple of the many reasons why:

I proposed that he pay me a flat rate each month, but that I lend him this money as a line of credit- he could use the funds to buy deals and let payments roll onto the principle. I was set to make an aboveaverage return, and he had access to the money he needed to grow.

Each property (deal) needs to stand on its own. It’s too easy to combine a good deal with a bad deal to have them both OK - but the security is messed up; when the good house needs to support the bad one, if it turns bad the whole package is shot.

Other than thinking we were buds though, how did I vet him? What did I know about him?

Marital law affects the collectibility of the debt - including both the rate you can charge and the process by which you can foreclose. In Ohio, it meant that half of the home’s equity wasn’t even available to be pledged; in Wisconsin, there are different foreclosure processes for owneroccupants compared to businesses.

Did I talk to his wife? Yes, but only in the beginning (which cost me later) Did I talk to other lenders he was working with? No. Did I verify his purchases? No. Did I verify his tax returns? No.

I didn’t know any of that!

Everything was OK in the beginning, but when the real estate market went sideways, I thought I was secured by his house - but because I was not attached to the actual deals he was doing, when he sold his properties he used proceeds to pay everyone involved - but me! The good deals still threw off chunks of cash… but I saw none of it.

Component #3: Bad Paperwork & Processes

Final tidbit- I had previously only used

If you are sensing a theme, you might be

The stupid parts were pretty simple.

I didn’t lend to the right person (or do the work to find out either way.)

I didn’t secure against the right properties (I thought his house was enough.)

Be sure to register to attend the January 11th MAREI meeting to learn what you should and should not be doing as a Private Lender - MAREI.org/JanMtg reputable title companies here in Milwaukee like Summit and Land Title - I didn’t know how the actual process worked. So when I had him sign the note and mortgage, I didn’t think to check if there were other lenders already on his house. And even though the note we signed said it was a first mortgage, his title company didn’t tell me that wasn’t the case when they recorded my note.

able to guess how much money and time I spent on the paperwork (that secured my life’s retirement savings?) $0 dollars.

And about 15 min.

I went online and searched for a promissory note I could copy and paste into a word doc and edited in my personal info for the deal.

Eric Lundberg Real Estate Investor at Sell Now Wisconsin Milwaukee REIA

Have you ever done that? Or something close? Do you know how ridiculously common this is?

One of the advantages of having a front seat at the REIA for so long, is that I have heard about a ton of deals between members; I especially hear about the deals that go bad.

What is the most common problem?

Well, like me, they lent to the wrong people or didn’t tie it to the right property. However, in ALL cases, the paperwork didn’t cover their butts the way it should have.

That. Is. The. Point. Of. Paperwork.

If we lend money, we want our worst outcome to be that they pay us off on time.

Let that sink in for a minute.

You don’t need to lose a lot of money from mistakes (like I did) to learn what’s best when it comes to lending or borrowing private money.

Simply join us on Tuesday, January 11th to learn from our guest panel of experts, people who lend money every day -

Susan Aubin from Merchants Mortgage Jeff Newhard from Newieco Private Capital Bruce Belanger from Finishline Funding Rachel Bailey from Creative Capital Lenders Our guest speakers are going to be packing a ton of information into our short presentation so you can learn what to watch out for as a private lender and if you are a borrower, you can learn what lenders are looking out for when you borrow from them.

And before you start Goolging for lending documents, be sure to check out the lending documents from Attorney Rick Davis at www.MAREI.org/Forms

THE WEALTH BLUEPRINT OPERATING LIKE A BUSINESS Do you have doubts about being a real estate investor?

Are you scared to make offers because you are afraid of making a mistake that could cost you tens of thousands of dollars? Are you having a hard time finding the time to grow your real estate business? If you answered yes to any of these questions, take the time to read this article carefully.

My name is Robyn Thompson and I have been investing in properties for over 15 years. I have bought, renovated, and sold 339 houses. I started my real estate business with $500, and I had to learn how to run a business like a business, not a hobby. I learned a long time ago that successful real estate investors do things differently than amateurs. I am going to give seven habits that all seven-figure real estate investors possess:

Have a Weekly Marketing Plan All serious business owners who make over seven figures focus on marketing WEEKLY. We take marketing as serious as a heart attack because wealthy business owners know that marketing = revenue. No marketing means no profits. All you need to do to raise your income is make an appointment with yourself and put it on your calendar for one hour a week to focus on marketing to attract desperate sellers.

One measly hour a week without interruptions is all it takes to up your income by massive amounts. During the hour, you call realtors, order “We Buy Houses for Cash” signs for your car,

All serious business owners who make over seven figures focus on marketing WEEKLY.

execute direct mail campaigns to out-of-state owners, landlords in the middle of evictions, or attorneys who have desperate clients who need to sell and put an ad in the newspaper in the real estate wanted section.

Execute the Plan

Robyn Thompson the Queen of Rehab Guest Trainer at MAREI in February

The second step is to execute the marketing. The signs must be put on the car, the direct mail list of out-of-state owners must be bought, and you must write a simple onepage letter telling the desperate seller that you want to buy their house. The envelopes must be stuffed, addressed, and mailed. The ads for the newspaper need to be placed. You must call the top producing realtors and tell them you want to buy several properties.

Answer Your Phone Calls All serious business owners know that you must quickly handle the incoming calls. Answer them LIVE! No answering machine. Approximately 60% of the desperate sellers will hang up if they do not get a live person on the phone. When you realize that any one of the hang-ups could be a $25,000 check or more, you will pick up the phone and not let it go to voicemail. Better yet, get someone else to answer it 24 hours a day. I use PATlive to answer the calls and take down all the critical information about the home. They email me all the important facts within minutes and then my secretary eliminates all the bad deals and no deals.

She will eliminate all the tiny houses under 1000 square feet, as well as the rough neighborhoods with high crime.

I also don’t like busy streets, train tracks, or power lines directly behind the house or functionally obsolete floor plans.

Get Comps Get four rock-solid sold comparables so you know exactly what the home will be worth when you get it renovated.

All successful real estate investors do their homework thoroughly before they construct an offer to buy. Look at your exit before you enter. Make sure you are buying houses that 85% of the buyers want to call home. The home must appeal to the majority, not the minority.

"

ALL SERIOUS BUSINESS OWNERS KNOW THAT YOU MUST QUICKLY HANDLE THE INCOMING CALLS. ANSWER THEM LIVE! NO ANSWERING MACHINE

"

You will need four very similar sold properties to determine an accurate price for your new property. The sold comparables must be in close proximity, the same style of house, no more than + – 10% in the square footage, and the same number of bedrooms as the house you’re looking to buy.

Mature, Adult, Competent Contractors

A serious business owner is always watching the construction process closely because there are three factors that will make your project a complete success or a total failure; they are time, quality, and price. Great contractors will renovate the house quickly for the fixed price If I can’t find four sold properties in the past that was agreed and never sacrifice the quality 180 days or less, I walk away from the house. of their workmanship. Many beginning Yes, that is right. Walk away! Do not gamble investors cut corners and only worry about the with your hard-earned money! All serious price. They end up with a construction project business owners know when to walk away. that takes months to finish and quality is Never get emotional about any deal. There are mediocre at best. They lose thousands of millions to buy and tons of dollars on carrying costs and end up desperate sellers. with a house that won’t sell so they YOUR REPUTATION are stuck renting it.

Know Your Rehab

"

IS THE MOST VALUABLE ASSET YOU HAVE IN BUSINESS

Compile a detailed list of repairs before you close and make sure your budget includes $7000 – $10,000 for WOW, sexy sizzle features that will make your house drop-dead gorgeous.

Your reputation is the most valuable asset you have in business. You always want your house to be in the top 1-2% of the houses for sale. If your home beats all the competitor's hands down then it will sell in days, not weeks or months.

Carrying costs can eat a business alive by eroding profits quickly. A successful real estate investor prepares a detailed scope of work that lists all brands and SKU #s of the materials you demand. This list is provided to the contractors several weeks before closing. All contractors should quickly prepare their estimates and proposals so you can make your final selections before closing. All contractors should be ready to start the renovation process the minute you close.

"

Writing big checks to buy and fix and getting little rent checks in return will put you out of business quickly.

You Can't Do It All Yourself Last but not least, all serious real estate investors who make seven figures never take their eyes off the selling machine. We know to hire the best and pay them well. You never step over the dollars to get to the dimes. I hire the top producing selling realtors to sell my homes and I pay them 4.5% for commission, not 3%. Most top-producing selling realtors have five or more approved buyers that they are showing houses to at all times.

If you have a house that the majority of buyers want to live in and you made it drop-dead gorgeous so it is the best house for the price, the top selling realtors will get the house sold fast. They are extremely motivated to sell it when the commission is 150% higher than all the other properties in the MLS.

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