Real Estate Journal - Spring 2017 by National Real Estate Investors Association

Real Estate Journal

Spring 2017

2. Crowdfunding - The Time Has Come: The Promise

7. Let's Take the Opportunity to Reform HUD

3. Success Will Never Be a Place for Us, it is a Path

8. A Crystal Ball

4. Four Simple Things You Can Do to Grow Your Business in 2017 5. NREIA Legislative Update "Vacation with an Education" on National REIA's 19th Annual Cruise

How to Buy Good Investments, Not Trophy Houses

10. 7 Reasons Why Online Real Estate Leads are Like Gold $$ 11. Prepare Investment Properties for Winter Weather

6. Managing the Information Barrage

Circulated To Over 40,000 Real Estate Investors Nationwide

$4.95

Vol. 2 Issue 2

Member Take Control of Your Retirement Spotlight Savings with a Self-Directed IRA

ately, there has been a lot of

discussion about self-directed IRAs and how beneficial they can be for real estate investors. It doesn’t take much searching to come across recent news articles lamenting the fact that an alarming number of Americans have little to no retirement savings. A fact that, while very concerning, doesn’t have to be everyone’s situation especially real estate investors! Imagine for a moment if you could use your retirement accounts to invest in real estate – utaka Maseba’s real estate journey started in 2014 similar to what you’re currently as a way to diversify his doing, but also within the confines investment portfolio. Having no of an individual retirement prior knowledge, he enrolled in account, or more specifically one a local junior college and ended that’s “self-directed.” up getting his real estate license. His next goal was to attend every meeting of several REIA’s for half a year. He paired it down from seven groups to two, and is now an active member of the LA South REIA and LAREIA in Los Angeles, California.

Yutaka Maseba

We know that real estate investors to accept. That’s why National know the value and importance of REIA has teamed up with longtime putting their money to work in local-REIA supporter Equity Trust ways they choose and for the risk continued on page 17 and rewards that they’re willing

Key Economic Trends to Watch in 2017

Please tell us a little about By Chris Kuehl, Ph.D. who you are and what you nd now the Trump era good as the economies of either go up at least twice more in the did before getting into real begins – at least formally. Reagan or Clinton. coming year to end up somewhere estate investing: I work in the international entertainment industry. My

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What kind of shape is the economy in as he takes over – as compared to what other Presidents before him faced? What are the chances his goals will be met and what are the factors that will make accomplishing these goals tough and perhaps even impossible? In the most general terms he inherits an economy that has clearly started to recover from the grinding recession that started in 2008 and it is in far better shape than when Obama took control. It is not as

As the term starts Trump will be facing at least three trends that started in 2016 and are expected to be a major factor in the coming year. The expectation for interest rates for most of the last eight years has been that they would stay low. This is a policy that doesn’t have all that much to do with the President and has developed over the course of two Fed Chair terms (Bernanke and Yellen). They rose in December and the current assessment holds that they will

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between 1% and 1.5%. The second development is inflation – mostly driven by higher wages in select sectors. The rate now is close to 2% at the core level and is expected to continue inching up. Nobody is expecting hyperinflation or anything even close. For now, this level will actually be a good thing and stimulative to a degree. It will also help convince the Fed rate hikes remain a good idea. The third development is the strong dollar continued on page 18

Real Estate Journal

Rays of Positive Sunlight are Coming Through for Crowdfunding!

By Scott Whaley

market leader does not an industry make, or future guarantee. However, judging from the conversations I had with both beginning and experienced private lenders on the Walter Wofford and Quest IRA cruise, we think they are not alone. Rather, they are indicative of a market leader who is showing investors, borrowers and lenders a glimpse of the current state of affairs and also, assuming that the trend for them and us continues, a very bright future. Behold, the future of less regulation and more direct connection: the crowdfunding and PeerLending platform, Patch of Land, is looking good! And, we believe they are not alone. Crowdfunders, peer-to-peer lenders and private lenders, OH MY! If you are a traditional banker, loan officer or Wall Streeter you may feel just a bit like Dorothy in “The Wizard of OZ.” Welcome to the age of connection! Like it or not, it is here. Regardless of the vehicle, if ne

Source: Patch of Land

you deliver or use a connection faster, cheaper and better, just like Lyft vs. Yellow Cab, you will most likely win. Functionally and inherently, collectively connected independents Trump large, top down, institutional type businesses like money center banks. Crowdfunding & Peer-to-Peer lending platform, Patch of Land has been a great study for those wanting to observe how this idea can, and does, work for us all. With the idea that the faster,

more and better the connection, the greater the success, Patch of Land is leading the way in providing funding to real estate investors and borrowers alike with a fivefold increase from $5,000,000 to $250,000,000 of total dollar amount lent out and a like amount taken in from investors with no signs of leveling out on the horizon. Need I say more? In many ways crowdfunding and peer-to-peer lending have been discounted and ridiculed by

the ruling lords of intermediation aka, brokers, syndicators, Wall Streeters, bankers and others. They believe in the superiority of their investing and lending acumen and see their counterparts in this new connection business model as lacking in sophistication, skill and ability. As Al Pacino, remarked in the movie The Devil’s Advocate, “Vanity….definitely my favorite sin!” continued on page 14

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Real Estate Journal · Spring 2017

Real Estate Journal

Deeper Due Diligence By Jeffery S. Watson

ave you ever been in a

going to be run for the next decade. Before you agree to go further into a deal, allow me to suggest some high-level due diligence requirements pertaining to your potential business colleagues. This is over and above the due diligence as to any asset or collateral involved.

situation where you heard the same information two different ways from two different sources at or about the same time? That was me when it came to the subject of due diligence. At the recent Advanced Strategies workshop for real estate investors, the opening presentation was 1. Gather Financial and about due diligence. At the same Personal Information time, I was reviewing questions • Examine their last 2-3 years of about due diligence that had arisen tax returns, and review current out of a complicated lawsuit that financial statements with supI’m watching spin out of control. porting documentation. Do Because of what I’ve heard and this to determine if they are as seen, I strongly suggest that financially savvy and successyou evaluate your due diligence ful as they project themselves parameters and processes. to be, not just on the surface, Set levels of due diligence but 2 or 3 layers down. requirements based upon the • Obtain credit reports not duration of a deal and the amount only on your prospective of money involved. These duration colleague, but also on their and dollar amounts will depend spouse or significant other, as upon your personal preferences. well as on the adult children If you’re doing something for less who are going to be involved than $10,000 that is going to be paid in the enterprise. Even “siback in 90 days, your due diligence lent” spouses can have huge will probably not be as exhaustive influence on how a deal or as if you were making a $250,000 business venture unfolds. investment into a business that is

• For a nominal sum, you should get criminal and civil background checks.

asked to provide the same level of transparency, particularly if you are looking at coming together for You may want to obtain the a long-term business relationship. I also suggest that you get a second services of a private investigator or a screening company to help you opinion from someone such as your obtain all this information. Good accountant, lawyer or professional landlords know (particularly those business advisor. Have them go who use the resources available to over the information as well. them through National REIA) that much of this information can be 2. Go with Your Gut gathered through various Tier One Do not ignore your gut feelings, vendor relationships that National and listen to the cautionary words REIA has. that may come from your spouse. The idea behind getting this type I’ve said it before, and I’ll say it of background information is to again. Some of the worst deals I help you determine the authenticity have done were done despite the and veracity of the people with fact that my lovely wife advised me whom you’re contemplating doing against them. Ignoring her advice business, whether it’s making a loan, has cost me about $250,000 over funding a deal, joint venturing, the years. or establishing some sort of longterm business relationship that will 3. Ignore the “Fluff” be jointly owned. By looking at a in Testimonials person’s tax returns, credit report and References and financial statements, you can You are looking for the negative tell whether they are a wealth or critical things that people who accumulator or a spend-it-as-fastknow your prospective business as-they-make-it individual. colleague better than you are saying By the way, there will be situations in which you will be continued on page 7

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Real Estate Journal

ClearVue Bed Bug Traps Now Available

here has been a lot of talk

lately about the growing problem of bed bugs and how to deal with them. Previous issues of RE Journal have shown that bed bugs are here to stay which, while disheartening, is the new reality. Unlike other vermin and pests which can be controlled and eliminated using any number of methods, effective solutions to detect and prevent bed bug infestations are limited. Fortunately, NREIA’s latest Tier I vendor partnership with ClearVue Technologies provides a new alternative that has proven effective and affordable for residential property managers and owners: ClearVue Bed Bug Traps are now shipping, with a discount available to NREIA members (use Coupon Code “NREIA” at bedbugtraps.com). Bed bugs are attracted to you while you sleep by the Carbon Dioxide (CO2) you exhale when you breathe. ClearVue Bed Bug Traps use the bed bug’s natural instinct to attract and intercept these pests as they come looking for you. The traps use a safe, low-level, CO2 beacon which mimics the exhaled breath of a human. The CO2 becomes highly concentrated within the base of the trap, simulating a meal that bed bugs cannot resist. These traps use scientifically designed, patent-

pending technology to mimic the favorite food of the bed bug: you! As we’ve learned, the scale of this problem has reached global proportions. Bed bugs do not discriminate. They know no social barriers and affect people of all incomes in all neighborhoods. They take up residence in apartments, condos, houses, hotels, schools, public transportation, hospitals, businesses, and even movie theaters. This means that even if you have an exceptionally clean and well-kept home, your normal daily activities give bed bugs a way to hitch a ride home with you. Here’s the scary part: just one egglaying female (the size of an apple seed) can produce a full infestation of bed bugs in just a few weeks (yikes!). Even worse, you're very unlikely to detect bed bugs in your home until you have thousands of them already living with you. Bed bugs can hide in paper-thin crevices and typically come out at

night to feed on blood from you, your kids and your pets. They are so incredibly tiny they’re able to spread from room-to- room using the wall outlets and even the air vents. If your neighboring apartment has bed bugs, you're only six inches away from having them as well. Too close for comfort? You bet. These little vampires only feed on fresh blood. In some severe cases, people have been bitten hundreds of times in one night! By the time you see even one bed bug, there are usually hundreds or thousands more hiding nearby. So what can be done? The number one strategy recommended by the EPA and the Centers for Disease Control is to use insect monitors to detect bed bugs faster and earlier. That’s where the new ClearVue Bed Bug Traps come into play. They intercept hungry bed bugs that come out of hiding seeking a

meal. Once the trap is activated and producing CO2, the bed bugs’ natural instincts compel them to follow the beacon emanating from the trap to its source. Once trapped (safely inside on the glue surface), the patent-pending design ensures trapped bed bugs cannot escape. ClearVue Traps have been fieldtested and proven effective in several trials: • A multi-family apartment with a severe infestation. After repeated use of ClearVue Bed Bug Traps, several thousand bed bugs were captured and the tenants reported no more bites. • A major hotel that had been spraying rooms with pesticide powders and sprays for 15 years without success. Immediately following professional spray treatments, physical inspections revealed continued on page 21

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Real Estate Journal · Spring 2017

Real Estate Journal

National REIA Spearheads Landlord Protection Victory in Ohio By Charles Tassell

oes this

scenario sound familiar? You are pretty sure you had a tester stop by sometime over the past week, so the letter from the Fair Housing group wasn’t that big of a surprise. However, upon opening it, the jaded expression fades to dismay as you read that a series of violations have been declared. Based on the agency’s judgment these alleged violations will cost you $35,000 a piece, plus court costs IF you risk going to court, but if you call them right now, you can settle for the low, low price of… At some point, it begins to sound like a sales pitch and you just wait for the Ginsu steak knives to be thrown in for good measure! However, as scary as that sounds, real estate investors across Ohio have been receiving similar letters for years. With an outdated version of HUD regulations mandating excessive

The Ohio Statehouse Image courtesy of the Capitol Square Review and Advisory Board.

minimums, providing court costs – no matter how inflated – and listed as punitive damages so they went right back to plaintiff, property owners didn’t stand a chance. Attorneys often recommended just

settling, no matter how spurious the claims might be. In fact, the situation so lacked parity to standard legal practices that, unlike any other trial scenario, the plaintiff could change

their claims against the defendant in mid-trial! Additionally, the conflict of interest arising from the plaintiff being awarded the outrageous fees was one of the first broadly recognized problems with the existing structure in Ohio. Ohio law, unlike federal law and those of most states, imposes mandatory attorney fees and mandatory damages if a violation is found. This created an incentive in Ohio for fair housing agencies to aggressively bounty hunt and bully real estate investors into paying them a settlement since fighting the charges was too expensive and risky. One case in Ohio finally brought the issue to a head: Helen Grybosky. When the aging widow was targeted and asked to settle for an outlandish sum, an attorney, not familiar with the continued on page 23

Congressional Update By Matt Keelin

National Real Estate Investors Association (NREIA) is excited about the prospect for legislative progress in 2017. The incoming administration is expected to move quickly with a number of agenda items. One of our main partners The Seller Finance Coalition has been active, already meeting with past Co-Leaders Rep. Roger Williams (TX-25) and Rep. Henry Cuellar (TX-28), who expect The Seller Finance Enhancement Act to be reintroduced in the near future. he

We expect this session of Congress to be amongst the busiest in recent memory. President Trump has proven that he’s not afraid to push his agenda, as seen by the multiple campaign promises that he has already fulfilled. From regulatory to immigration reform, the President has already produced a significant amount of change that has a lot of heads in Washington to spinning. Within the next couple months, we expect Congress to address Obamacare repeal and replace,

tax reform and a new budget to be passed. However, what this legislation actually looks like is still very much up in the air. The administration has indicated that it will not remain on the sidelines. More important to our members, President Trump has spelled out plans to go after Dodd-Frank. As of this writing, the President has issued an Executive Order to begin the process of rolling back Dodd-Frank.

While numerous regulations will be addressed, there are three primary issues beyond the greater Tax overhaul that National REIA will be focused on, starting with a renewal of the waiver for the IRS billing of phantom income after a Short Sale. Eyes are also focused on the 1031 Exchange issue which has plenty of headwind making it almost a non-starter. The final issue is the revamp of the flood insurance program, which can be expected later this year.

National REIA is one of the founding members of The Seller Finance Coalition, which was formed in February of 2014 to advance the interest of the seller finance industry. Last year the Seller Finance Coalition continued to grow with the addition of several thousand new grass roots members across the country. For more information about the SFC and the Seller Finance industry, visit www. SellerFinanceCoalition.org. Follow them on Twitter @SFCdotORG and like them on Facebook. Real Estate Journal · Spring 2017

Real Estate Journal

How to Buy Rental Property – A Step by Step Case Study By Chad Carson

imply buying investment property

will teach you more about real estate investing than anything else could. But when you first start (or restart) investing, making a purchase is not that simple! You don’t even know all of the steps. So, the goal of this article is to give you the next best thing to a real deal. Using an example, I will share how to buy a rental property with a real-life, step-by-step process. Think of this as riding co-pilot with another investor so that you can learn how to fly. I have been a full-time investor for 14 years. I’ve flipped properties, rented them, financed them, and everything in between. While all of the real estate tools I’ve used are helpful, my favorite wealth-builder is still the small, simple, residential rental property. These are the properties that set me free to have time to write this article for you, to travel with my family to Ecuador for a year in 2017, and to explore other things

beginning to end, I won’t go as deep on each step as I could. If you need more help with a particular step, be sure to send me a note or check out some of my other articles on buying investment property on CoachCarson.com. Ready to learn more about buying investment property? Let’s get started!

Part 1: A Plan Always Comes First “A goal without a plan is just a wish.” — Antoine de Saint-Exupéry Craig and Regina know the in life that matter to me. That’s why sized, Midwestern university benefit of planning. Craig works I’ll focus on the small, residential town, which is also where they as a supervisor for a commercial rental property in this example of plan to invest. construction company that plans buying investment property. I’ll take you through the story of each construction project from For a brief background, the their deal, from the preparation, to beginning to end. Regina is a buyer of this sample property is a the marketing, to the closing of the middle school teacher who plans couple named Craig and Regina. purchase, and finally to the tallying her entire school year and every one of her lessons. Regina also They are in their 30s, and they of their property’s financials. want to be part-time, buy and hold Because my overview of this has a real estate license, which landlords. They live in a medium- sample deal will be long, from continued on page 16

The Ins and Outs of Expert Advice By Jane Garvey

he answers to nearly everything

you could ever want to know are right at your fingertips these days, readily available in seconds if not minutes. At least that's how most everyone is behaving. Is this information you are retrieving and relying on accurate? You must consider the source. Did you know that a beautiful website doesn't necessarily make someone an expert? Top rankings on Google are an indication that someone has hired a good techie, not that they know anything worth sharing. There are many who misinform with authority. People in chat rooms will answer any question you ask whether they actually know the answer or not. Did you know that an answer might be right one minute and wrong the next? The economy changes, prices change, laws change, consumer's tastes change, your financial position changes, and your life circumstances change. Some of these changes are slow moving, but some literally can change overnight. Are you taking 6

into consideration the age of the information you are retrieving and its relevance to your circumstances? Did you know that the same answer that might be right for your friend in Elmhurst, IL might get you in big trouble across the county line in Oak Park, IL? The fellow that has 2000 rentals in Phoenix, AZ might be answering your question with seemingly great authority, but if you are doing rentals in Chicago, IL the

answers once again could get you in big trouble. We are a nation of laws, but most of the laws affecting rental property ownership are not national. Rental practices are mostly governed by state, county, and city laws and ordinances. Did you know that acceptable materials and methods for various repairs also need to meet local standards? The same plumbing that is quite functional and acceptable in a single story suburban home

may not hold up to the water pressure in a 50 story high rise. Local codes will dictate the acceptable construction standards for everything from putting in a sidewalk, to building a deck, to hooking up the plumbing for a kitchen sink. Not doing it within the mandates of the local codes could be an expensive mistake. If you look around on line you will find many websites offering leases and other rental documents, some for free and some for a fee. One size does not fit all, and some of the websites give a nod to that, offering "state specific" rental documents. Unfortunately, that is not good enough, but is a ready trap for the inexperienced and uneducated landlord. To drive this point home, I am going to share a story with you. Several years ago I got a call from a woman from Chicago who was highly distraught. She had lost her job several years earlier and after unsuccessfully looking for work, continued on page 19 Real Estate Journal · Spring 2017

Real Estate Journal

The Future of the Real Estate Investor’s Business or Company By Rebecca McLean, Executive Director, National REIA

hat is the real estate

investing business or company of the future? It’s an old question for every industry. In corporate America, this question inspired Gurus such as Peter F. Drucker to write about the Concept of the Corporation and Tom Peters to go In Search of Excellence. In the beginning of our industry it inspired William Nickerson to write How I Turned $1,000 into Three Million in Real Estate – In My Spare Time and Al Lowery to write How You Can Become Financially Independent By Investing In Real Estate. It also continues to be a new questionone that reflects the new market for sellers, buyers, rehabbers, private lenders, wholesalers, etc. and the fundamental re-design of the operating system inside our investing businesses. In the Real Estate Journal, we look at the question of what takes a real estate investor into the future-

and what future-focused investors do-from a number of perspectives. Each month we have articles on strategies, economic forecasts, and success stories. We also host RealEstateInvestingToday. com which keeps you up to the minute on industry-related news & information. As trends and legislation continue to change our

Some investors are prepared for future success because they are designed for innovation. Check out our previous Member Spotlight stories, where they pushed themselves to go beyond the old “That’s the way we’ve always done it” thinking. Looking across the landscape of the new economy, we see a fundamental shift in what an investor must do to capture the future: We must attract the best people from contractors and admins to investor oriented realtors, inspectors, private lenders and others and create a “social glue” that holds those people together on industry, we offer the National a team where the whole is greater REIA University with classes than the sum of its parts. that keep you informed with the Progressive companies compete necessary skills to capitalize on by having a team that they can these changes. Most importantly rely on to provide resources and Uniting Investors, our online solutions that others cannot community of investors, answers especially with such speed, they your questions on all things investing to help you find your path to future success. continued on page 19

Deeper Due Diligence ...continued from page 3

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Real Estate Journal · Spring 2017

about them. Do not ignore such information! If you are evaluating someone on the references and testimonials they offer, contact the people giving those references and testimonials and ask, “What was the most difficult or challenging thing about working or dealing with, or being a lender to, joint venture partner with, or co-investor with _____________?” These suggestions are designed to help you do a deeper level of due diligence regarding the individuals with whom you may be entering into a business venture rather than into the deal itself or the potential exit strategies. Why? Because deals are made between people, and good deals are made between people who both want good things for each other. If there is a fundamental problem with the people in the deal, it doesn’t matter how good the deal is, or how successful the business venture is, or how much equity is in the house, or what interest rate is being paid, or how many points are on the table, or how big the cash flow is. Something will go wrong with the deal if there is something wrong with the people involved.

4. Map Out Your Future Expectations All parties to the deal must sit down and map out in writing their future expectations as to how the deal or enterprise will look, evolve and transpire. On a 90-day loan of $10,000, that will be a brief statement of a sentence or two. If several people are coming together with a great business idea that is a viable opportunity for the next several years, a far more detailed written set of expectations and goals needs to be articulated by everyone in the deal. Mapping out your goals and plans needs to be more detailed than just saying, “Have fun while doing good and making money.” Every business endeavor should be designed to make money and be profitable, but that alone is an insufficient reason to engage in a business transaction. There will always be more attractive, shinyobject ways of making money that may distract one or more people involved in the business opportunity. Instead, I recommend that you think it through with much longer-term vision. What

is it about this opportunity that will keep each person attached to it and doing what they need to do even when the profits aren’t as high as they thought they’d be and the work is twice as challenging as they expected? These conversations and thoughts will help you make the right decisions about business opportunities. Far more often than not, they will probably cause you to say “no” to an opportunity or at least seriously revamp the idea. If this can help you avoid one problematic situation that could cost you tens or even hundreds of thousands of dollars in legal fees and years of your life unwinding the mess, then this information will have been of great benefit to you. Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio 4 times via litigation. Read more of his viewpoints at Watsoninvested.com.

Real Estate Journal

31 Questions to Grow Your Revenue By Alex L. Goldfayn

he more we communicate with customers and prospects, the more we sell. The more that people hear from us, the more they buy from us. (The opposite is also true, the less they hear from us, the less they buy.) Most of the communications in my system of revenue growth are questions. I teach the customer facing people at my clients’ companies to ask these questions regularly, systematically. Here are 31 questions you can ask your customers and prospects to grow your sales.

Questions to Ask Yourself 1. How do I help my customers and prospects? (If you don’t know, ask them, they’ll tell you.) 2. Is my material – web site, brochures, and even personal emails – about my products and services, or about how I help my customers? 3. Am I asking for the business every time it is discussed? Am I pivoting to the sale at every opportunity? 4. Because my customers can feel

my attitude, am I bold, confident 4. Do you think working with us saves you money? Talk about and positive during every that please. sales conversation? 5. Do we help you make money? Questions to Ask How so? Your Customers 6. Do we help you look good to your customers? How? To increase order size annual sales: Note: None of the questions 1. Did you know we also do x? Are mention the word you aware we do y? Most people above testimonial, which is stressful and don’t know we do z… 2. What percent of your business uncomfortable. You’re just asking on this product or service people for their feedback. Just like would you guess we have? How having a drink with a friend. do we increase that by 10% or To utilize testimonials 20%? (It’s a small increase for your customer, but for you it 1.We have a customer similar to you, may I show you what they adds up in a hurry across 10 or have to say about us? 20 customers.) 2. Here’s what some customers like 3. What are you working on these you have to say about us. Now days that I can help with? can I help you this way too? 4. Just checking in, how are you? What’s new?

To get testimonials 1. What are some of your favorite things about working us? 2. How does working with me help you? 3. Does working with us save you time? How much time approximately?

your firm – either suppliers or customers – who I can help like I’m helping you? I’d like to make you look good. Note: I don’t mention the word “referral” in any of these. That’s another stressful word. Further, the key to actually getting an answer to these questions is silence. Ask the question, then stop talking and listen. Do not speak first. Let the person think and answer your question. You’ve been thinking about asking for this referral for a long time, but your customer has not!

To pivot to the sale and close the business

1. Shall we write it up? 2. Would you like to add to this order, or shall we write it To ask for referrals up separately? 1. Who do you know like yourself 3. Cash or credit? who would benefit from working 4. We have that in stock, shall we with me like you do? get it out in today’s shipments? 2. What colleagues do you work 5. Looks like we only have one (or a with at your company who I can few) left – want it? help like I help you? I’d like to 6. Will you be writing a check or help your company more. financing? 3. Who do you know outside 7. Sound good?

continued on page 21

Seller Financing and Land Contracts By Carmine Camino

he housing market, which

took a considerable hit as a result of the 2008 recession, has rebounded in the past few years, in part due to an increase in seller financed residential housing transactions. A significant portion of seller financed transactions have utilized the land installment contract to make residential housing available to the credit poor buyer unable to obtain conventional financing. The land installment contract is becoming a useful tool in the seller financing housing market, and its use is expected to continue to increase as the housing market expands and improves. Private seller financing currently requires that the parties involved not only consider, but also comply with the Dodd-Frank Act, as well as other federal and state requirements, depending on their sales threshold. The Dodd-Frank Act adopted new laws that expanded previous regulation issued by the Board of Governors of the Federal Reserve System, among them

licensing and regulation of loan originators, and rules governing installment contracts. The Consumer Financial Protection Bureau (CFPB) is empowered by the Dodd-Frank Act to implement and enforce rules and regulations issued in accordance with the laws passed under the Act. Seller financing will certainly become more prevalent and significant as interest rates rise. Borrowers will find it more difficult to obtain conventional financing

in light of the ability to repay guidelines which are required to be met for certain loan transactions pursuant to the Dodd-Frank Act. As a result, investors and lenders with REO properties who will want to sell them will find it useful to understand the rules and regulations governing private seller financing. As previously stated, a significant and growing portion of sellerfinanced residential housing transactions are being closed with

land installment contracts. These agreements, known also as contract for deed and land contracts, provide an opportunity to buyers with poor credit that are unable to obtain conventional financing to purchase and own real estate. This segment of the seller-financed market includes individual and small companies that complete a handful of transactions, and firms that purchase hundreds or thousands of homes that are resold under land installment contracts. For example, Battery Point Financial has purchased hundreds of homes located in smaller cities with backing and support from Kohlberg Kravis Roberts & Company, a wellknown private equity company. New York Mortgage Trust has a portfolio worth about $760 million of performing and reperforming contracts. The large volume of contracts are purchased from sources such as Harbour Portfolio Advisors, a Dallas, Texas investment firm known for selling continued on page 15 Real Estate Journal · Spring 2017

Real Estate Journal

Real Estate Journal Â· Spring 2017

Real Estate Journal

Member Spotlight ...continued from page 1 specialty is with Japanese animation and video games. It’s been a great career as I’ve traveled to many different places and have got to work with some cutting-edge technology. At first I worked for a multinational company and then started my own business in 1995. I’ve been interested in investing for a long time, but I really didn’t know how. Then fortune smiled upon me when a client asked

Where is your current market so, I was my own contractor and it investment. The first people I and what is your focus or turned out quite well and within met at my introductory REIA budget. The most difficult hurdle were a couple of multi-family area of expertise? After doing much research and consulting with several mentors, I decided to invest where I felt most comfortable, which is in my own backyard of Southern California. I started off with a single-family house but realized my interest was with multi-family properties and nonperforming notes.

to overcome was the fear of failure. I got over that when I realized I knew the answers to my questions or I knew where to get them.

Describe a typical work week for you as a real estate investor:

property brokers. It turned out they were the co-organizers of LA South REIA’s Multi-Family subgroup. When I decided to invest in multi-family properties I set up a meeting with them, and two years later I purchased my first apartment. They were very patient with me and always taught me what I needed to know as an investor. When I decided to pull the trigger, I had problems getting a loan because it was a four-unit apartment. I decided to pass on that deal and asked them look for a property with at least five units. One week later I was the owner of a better deal!

I’m a lifestyle investor so my investments should not be a job. The goal is for my investments to support the type of lifestyle that I want to live; There are things I that want to do, places I want to go, people I want to meet and most of all, experience life. I try to plan out my day the night before. In the mornings, I get in an hour of educational reading before my day even begins. Throughout the week I’ll go through the MLS listings, talk How do you fund your to my property manager, brokers, investments? and wholesalers. I also make sure The first house I funded myself. to network with other investors. Fortunately, I was able to make my rehabbing costs back right away How long have you been due to a high demand for shortVacationing in Waikiki investing in real estate? term housing. For my other deals, How did you get started? In 2015 I rehabbed my first single I’ve worked with outside investors me to research Robert Kiyosaki’s A former business partner and family house. and partnered up with members of Cashflow 101 game. I was actually I purchased a house for a homemy local REIA. paid to buy the game, then play it, Tell us about your first deal: based business. I later bought out and make a report. Unfortunately, I described my first single it didn’t work out for the client but my partner and put to use what I learned at the REIA meetings. I family deal earlier so let me tell it definitely changed my life! really wanted to get my hands dirty, you about my first multi-family

continued on page 20

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Real Estate Journal · Spring 2017

Real Estate Journal

Colorado Investors Summit on Out of State Investing Two Days of Down & Dirty Due Diligence

the old axiom “all politics is local” might hold true with politicians, when it comes to investing in real estate, Colorado is thinking nationally. The Investment Community of the Rockies (ICOR) is taking this approach to heart in a weekend summit they’re hosting in late April, 2017 entitled “Out of State RE Investing Summit: Two Days of Down & Dirty Due Diligence.” The summit is the first of its kind for ICOR. They hope to express the notion that while location is key to making a good investment, the aspects of “location” often get lost in the weeds. Normally when you think of location the words city, county & state come to mind. However, what is often lost in the discussion are the words neighborhood, street, infrastructure, level of hile

development, population, labor market, and the current economic situation. Then when it comes to investing out of state (in ICOR’s case outside Colorado) you can remove the risk by doing your due diligence but the challenge is not knowing what you don’t know. ICOR has collaborated with National REIA and sister chapters across the country to bring in representatives from many of the areas identified by Forbes Magazine as the “hottest markets” in real estate. Their expertise and insight into unfamiliar markets will help position investors with resources, intelligence and allies on the ground for making deals in areas outside Colorado. In essence, Organizers hope the twocreating a synergy of opportunity day summit encourages similar for investors that would otherwise events around the nation in the be unavailable. near future. The importance of which comes to light when you consider that improvements in technology and modern living are rapidly erasing the physical barriers to investment – almost as if your investment “backyard” is continually expanding. It also helps highlight the need for bringing together investors to not only learn what to do, but how to obtain necessary resources. ICOR’s Executive Director, Troy Miller, said the summit’s goal is to “remove the fears and pain-points associated with investing out of state.” He said “this will not be just some two-day ‘turn-key real estate seminar’ but rather an intensive team-building exercise that teaches due diligence, identifies resources and forges new relationships with investors from across the

country. Whether you’re in Colorado looking for a deal or sitting in Florida with investment opportunities, this event is one you won’t want to miss.” To learn more about the investing summit, which takes place in Denver, Colorado on April 29 & 30th, please visit www.ICORockies.com and click on “CONNECT” or call 970-682-4267.

As a member National REIA, you will have access to The Home Depot’s Pro Xtra Loyalty program where you will receive a 2% rebate on your Home Depot purchases, on top of their already low prices. You will also be able to take advantage of the Home Depot Appliance program that allows you to easily order the appliances you need from the exclusive catalog designed for NREIA members.

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www.NationalREIA.org Real Estate Journal · Spring 2017

Real Estate Journal

Real Estate Journal Â· Spring 2017

Real Estate Journal

Swing Into Spring: Kitchen and Bath Updates to Make Properties Bloom By Sulema Vela, The Home Depot

hen looking

at home upgrades, every real estate investor is trying to find the ideal balance between cost and ROI. When considering options for interior improvements, the first two areas you should look at are the kitchen and bathrooms. Create a Cutting-Edge Kitchen Depending on the home, updating a kitchen can be a large remodeling job or a small one. For a smaller remodel, focus on simple tasks like changing the paint on the walls or updating drawers and knobs. Choose a neutral color that won’t detract buyers from the look of the room – avoid colors that are too abstract or distracting for the general buyer. If you want to focus more on savings than color choice, the Behr PRO Paint line offers a thorough range of color shades and textures. Partners like

version of a kitchen remodel is known as a midrange project and the higher-priced version is called an upscale project. The difference between them has to do with the scope of work and the complexity of the project. It also takes into account different quality standards for finishes. For example, the midrange major kitchen remodel calls for a plastic laminate island countertop while the upscale version has a stone top. Granite countertops are still as popular as ever in the kitchen. These counters typically cost more, but having granite or another solid The Home Depot offer discounts line. If neighborhood houses surface that looks like granite will on bulk paints, so group purchases sell for $150,000 and you put a attract more buyers. One way to $75,000-dollar kitchen in, you’re save on counters is to avoid high together whenever possible. If the kitchen is out of date not getting your money back. end tiers – to most customers, and needs a complete overhaul, According to Remodeling granite is granite. be careful to invest in the right magazine’s 2017 Cost vs. Value upgrades to improve the bottom Report, the baseline or standard continued on page 19

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Real Estate Journal · Spring 2017

Real Estate Journal

Rays of Positive Sunlight ...continued from page 2 To be sure, the Elites will always have access to the levers of power and will always be around to some extent. However, the levers of heavy handed and experiencelacking regulators do, in the end, govern us all. The last refuge of the institutional lenders from past decades, regulation applied by far off regulators in Washington are slow to change and biased towards the status quo. Yet, that may not be enough to stem the tide. Year after year, Crowdfunding and peer-to-peer lending keeps confounding the media and other detractors with continued growth and lack of widespread fraud in spite of overregulation and opposition by entrenched and increasingly obsolete interests.

The current excitement is due to the level of activity in addition to which, it now appears that the new administration is philosophically inclined to let entrepreneurs have an even more regulatory free and open field to play on. If those words turn into reality with the raising of funding caps to $10,000,000 and elimination of restrictions that National REIA and REIFA are proposing it is quite possible that you will see growth in the Crowdfunding and Peerto-Peer Lending space accelerate even further. Legislative and political efforts over the years have taught us to not get carried away with our hopes and dreams of investing freedom. With that said, and because of that

experience, we hesitate to predict, but the speed of proposals and movement has been nothing less than astounding. Legislatively we currently have four different pathways for reasonable chances of success for changes and/or new regulations that can be implemented with regard to crowdfunding for the non-accredited investor. Without drilling down to the level of detail that only an attorney would enjoy, they center around four things: 1. Rules - You can change the entire game if you can rewrite or make changes to the rules. The rulemaking people are changing, so… 2. Reconciliation bills - Edits to existing bills and your changes

are thrown in with them 3. New bills - Where a new bill is passed and is added on to the original bill as an addition or change to the old passed one 4. Precedent - In other words, without changing a rule you change its interpretation. This also hinges on who is doing the interpretation so it ties into example number 1. But once the authority makes a new ruling... they can then point at that ruling and say, "Here is how we are justifying it now and into the future and it's based upon a new "ruling" or "interpretation" or referencing a new one of either. Obviously, none of this would be possible without the 180-degree shift we have seen in the bureaucracy that has, quite frankly, surprised us all. As investors and entrepreneurs we (and our activities) all of a sudden are not being looked at in a negative light with a prejudgement of guilt with regard to putting profits before people. The challenge right now is that there is so much upheaval and so much activity it’s hard to tell what the final outcomes will look like and how successful they will be. Right now, rays of positive sunlight are coming through.

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Real Estate Journal · Spring 2017

Real Estate Journal

Seller Financing ...continued from page 8 homes to lower income buyers using land installment contracts, and from Fannie Mae. Pursuant to the land installment contract, a buyer will agree to sign a purchase agreement that requires regular payments over a period of time, up to 30 or even 40 years. Legal title to the real estate remains with the owner financer. Title is transferred to buyer upon completion of the term of the contract. Land installment contracts come under the purview of the Dodd-Frank Act, and the CFPB is empowered to regulate such contracts. In addition, land contracts have been used in various forms for a considerable period of time, throughout the United States. State courts have dealt with such transactions in different ways, but have generally stated that they

are contractually enforceable. As a result, many states have passed consumer protective legislation that govern transactions using land installment contracts. Several articles that appeared in the New York Times in 2016 focused negative attention on land contracts, and suggested that the CFPB may be investigating this segment of the seller financed housing market. The authors of the articles emphasized that this market “cries out for federal oversight.” There is fear that there are too many unscrupulous sellers “looking to make a quick and easy buck on the shoulders of vulnerable, unsophisticated buyers.” Contrary to the claim that this market lacks oversight, land installment contracts are subject to CFPB scrutiny through the

authority of the Dodd-Frank Act, and many states have passed laws that govern transactions using land contracts. There may be unscrupulous sellers in this market, as there are in all markets, however the great majority of sellers and buyers are interested in completing fair and enforceable transactions so that each party obtains what they bargained for. If the objective is to permit credit poor buyers to purchase residential housing, the land installment contract is a valuable and useful tool that may be utilized to achieve this purpose. As a result of the recent presidential election, and the change in political philosophy and policy that is expected to ensue, many are skeptical about the future of consumer financial protection. While it may be difficult to

Strengthening Our Foundation

determine what policies the new administration, and Congress will emphasize and implement (as Yogi Berra once quipped, “it is difficult to make predictions, especially about the future.”), some have pointed out a recent comment from the Federal Trade Commission that stopping fraud is a significant part of its consumer protection program. A large part of the CFPB’s work also includes challenging fraud that harms consumers. There are more than a few in the financial services industry that will welcome the upcoming changes that are meant to curb the power of the CFPB, which in their view has been overly aggressive and exceeded its authority. While there can be no doubt that change is forthcoming, the work of protecting consumers from being subjected to fraudulent practices will continue. Also expected to persist, in light of the increase in interest rates, and the continued fallout from the recent recession, is the continued and increasing use of the land installment contract in the sellerfinanced housing market. Too many potential home buyers have been shut out of the housing market as a result of the recent economic downturn. As banks and mortgage lenders have been required to tighten lending requirements, private seller financing has stepped in to fill some of the demand for home buyers seeking housing. The land contract has, as a result, become an important and useful tool in achieving the objective of allowing buyers who cannot meet the mortgage bank’s stringent loan requirements to purchase a home. Carmine Camino is principal and managing member at Camino Law., LLC and serves as general counsel for National Lending Unlimited, LLC.

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Real Estate Journal · Spring 2017

11/20/14 10:51 AM

Real Estate Journal

How to Buy a Rental Property ...continued from page 6 she has used sparingly on the side to help friends and family from time to time. But they are not sure how to create a real estate investing plan. So, they start religiously reading every article from real estate planning nerds like Chad Carson and others, and their plan finally becomes much clearer. Here are the planning steps they take in preparation for buying an investment property.

peak. I outlined these in detail in “The Comprehensive Guide For Financing Your First Real Estate Deal,” but in brief they are: 1. Survival 2. Stability 3. Saver 4. Growth 5. Income

Craig and Regina decide they are in the growth stage. They’ve certainly passed survival and stability, and for several years now, What’s Your Wealth Stage? they’ve improved their saving rate to 50% of their income. So they The first part of their plan has now have $50,000 cash to invest, nothing to do with real estate. It’s and they want to grow it into about wealth building. something much bigger. Craig and Regina’s goal is financial independence. They want more What’s Your Strategy? free time and flexibility to do what Now that the couple has matters in their life. This is like the identified their wealth stage, it’s peak of their financial mountain. time for them to focus on a real But along the way, there are many estate investing strategy. Will they stages they must cross to get to that fix and flip properties? Wholesale?

Buy rentals? Invest in notes? Or something different? Regina loves Brandon Turner’s The Book on Rental Property Investing. Craig trusts Brandon’s advice because of his cool flannel shirt collection (seriously, they’re awesome). As a result, they are both convinced buying investment property is the strategy for them. But beyond that, how specifically do they turn their $50,000 into $500,000 or more so that they can get closer to financial independence? They decide that they will begin by doing several BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy deals in order to make the best use of their $50,000 nest egg. And after several purchases, they will use a debt snowball to own these properties free and clear within 13 years. At that point, they will have sufficient cash flow from real estate to make big life change

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decisions with their jobs. Of course, they will also continue living frugally and earning money with their jobs so that they can save as much cash as possible for buying investment property.

What’s Your Niche? Craig and Regina like their strategy of buy and hold rentals + BRRRR deals + a debt snowball. But they now need to decide what real estate niche they will use to apply this strategy. After browsing the list of real estate niches in the BP Ultimate Beginner’s Guide and studying the inventory in their market, Craig and Regina decide to invest in small multifamily properties (2-4 units). They like the combination of reasonable cash flow, easy financing, and multiple exit strategies. They are also not opposed to single family houses if the price is right. Because they are near a college town, they decide that the niche of college student rentals makes sense. Their university is increasing enrollment, particularly in the subniche of graduate students who they would like to target as ideal rental customers. With their wealth stage, strategy, and real estate niche in mind, Craig and Regina begin preparing to take action. Chad Carson is a member of the Metrolina Real Estate Investors Association in Charlotte, NC. He is a real estate investor, world traveler, husband and father of two children. Learn more about him at www.CoachCarson.com.

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Real Estate Journal · Spring 2017

Real Estate Journal

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A self-directed IRA can be a great way to build tax-advantaged wealth, drive meaningful impact in your community and enjoy freedom in retirement. Why? Because retirement money in these accounts can be used to fund investments in real estate, notes, tax liens, and more. Here are some of the ways a selfdirected IRA could benefit today’s real estate investor: • Profits grow in a tax-advantaged environment • You have the ability to diversi-

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Real Estate Journal · Spring 2017

Real Estate Journal

Key Economic Trends to Watch ...continued from page 1 and that could be the most vexing of the three. Much has been made of the desire to promote exports and reduce imports but a strong dollar will make that all the more difficult to obtain. Trump broke with decades of tradition by calling for the dollar to be weakened but was immediately contradicted by his Treasury Secretary who reiterated the US commitment to a strong dollar. Beyond the verbiage it is hard to shift the power of the currency as this depends largely on the actions of the Fed and the overall global demand. As he develops policies that match the claims and aims of the campaign he is in better shape than some of those in the past and is facing bigger problems than some of them. Labor force participation is lower than it has been since Gerald Ford was in office. It is now just a little above 62% and at the start of the Obama term it was at just over 66%. At the start of the term for George W. Bush it was over 67% and the two Presidents before Bush presided over an increase in the rate (Clinton and Bush Sr.). This is a complex measure of the workforce as there are many reasons a person may be out of the workforce. The number one factor is retirement and there have been more people ending their work careers than ever – at least 10,000 a day as the Boomers age in their golden years. Regardless of why people are leaving there is an issue with having too few people to fill the jobs that are becoming available as too many of those seeking jobs lack the skills that are in demand. During campaigns there are always themes that get more than their fair share of attention from the various candidates. These are those bread and butter issues that motivate the middle class – jobs are always at the top of the list along with taxes. Another symbolic issue is home ownership as this has long been the symbol of having “made it.” It has been part of the American Dream for generations and has been used as a measure of whether the economy is healthy enough to provide opportunity for the population. It has always been assumed that home ownership is the goal of virtually everyone and there are few events in life as traumatic as losing one’s home. The financial sector collapse and the subsequent surge of foreclosures ranked as the most wrenching period of the recession – often

referenced as more serious than losing one’s job. The rate of home ownership tumbled during the recession for the most obvious of reasons but has made a comeback since. In the last month or so there has been a decline again and for different reasons than motivated at the start of the downturn. The current rate of 63.5% is just slightly lower than the previous reading of 63.6% but the biggest concern is that ownership levels have stagnated and even declined for some sectors of the population. As one would expect the majority of the concern centers on the millennial generation as this has been the one that has not been reacting as previous generations have. The millennial is not buying single family homes as soon as the Baby Boomers did and not as soon as the Gen-X buyers. They have been slow to get into housing in part because they have been slow to start families and it is the arrival of children that often convinces people that apartment living is not for them. The family size has been smaller and the family hasn’t gotten started until they have been in their 30s. The multi-family option has been just fine for a longer period of time. There are other more practical inhibitions as well. The price of homes has hiked considerably in the last several years and that has been especially the case with the “starter” home. This has combined with the added expense of higher mortgage rates and the fact that banks have been more cautious. The down payments are higher and there are very few of those loans that don’t require that upfront commitment. The availability of the starter home is limited and many markets are facing real housing shortages as far as the inexpensive option is concerned. The sector in the housing market that has been growing is that in the higher end properties. The current slowdown in buying activity is not all that unexpected given their financial headwinds but the long term concern is that there has been a shift in the attitude of the millennial buyer that is not motivated strictly by the financial factors. Even those with kids are sticking to the multi-family option in many cases and surveys continue to show that people have been less committed to the idea of owning a home. The three reasons that have been cited thus include

fear they will not be able to sell in the future or at least not at the price they need to, a desire to be free to move where whim or a job takes them and a desire to be free of the responsibilities of owning a home. This latter concern has been forcing many people to leave their homes in retirement so that they can avoid things like mowing lawns and shoveling snow. The issue of job mobility is a big concern as most of the millennial generation saw what a job transfer or shift did to their parents. The house became an albatross that limited their options and put people in financial binds when they either had to move or just wanted to relocate One of the more challenging tests will involve manufacturing as this was a big part of the campaign and has been a concern for years. The US has been regaining its status as a manufacturing state for years and never stopped being a dominant player. These gains have largely come at the expense of jobs as robotics and technology have replaced a lot of the people that once worked in these factories and manufacturing facilities. The number of people directly employed in manufacturing has been declining since Eisenhower was in office. It was close to 35% when his term started and was down to a little over 30% when it ended. Every single President since then has presided over a further reduction of the manufacturing workforce and Trump starts with the lowest level yet – around 8% of the total US workforce. Remember that these are workers that are directly engaged in manufacturing – if you count all those people that work for manufacturing companies the percentage employed is closer to 30%. To increase the number of people working in manufacturing will be a nearly impossible task given the preference for the implementation of technology. Banning imports and restricting where US companies produce will have a minor impact and could even make the problem worse given that most manufacturing jobs are in small and mid-sized companies. Manufacturing in the US seems to be plagued by misnomer and myth and this has been the case for years. Perhaps it is because so few people ever actually see inside a manufacturing facility. For years, the story was that there was no longer a manufacturing sector in the US although the

numbers never bore this out. It has been about 30% of the GDP when one looks at all the people employed by the manufacturers – not just the ones that are running the machines. Today the political emphasis is on manufacturing jobs and there are myths here as well. The political assumption is that companies are ditching US workers to set up in foreign countries and although this does still happen the biggest issue is the replacing of human workers with machines and import restrictions will have no impact on this. There is perhaps good intent behind the moves that Trump plans to make but there is a good chance for a backfire if there is failure to understand the real issues in manufacturing. A steel import tax will be good for the steel industry but not so good for the users of that imported steel – the manufacturers that Trump wants to see hire more people Where this matters to the real estate community varies. The manufacturing job was what provided the working and middle classes with the income they needed to get into a house in the first place and now that avenue is simply not as common. The manufacturer is also a big factor in commercial construction going forward as they have turned their attention back to warehousing and distribution centers as they have confronted the limitations of the just-in-time system. The modern warehouse is no longer just a big box but a highly connected and electronically driven entity. This has been a bigger driver of commercial activity than has been the case in years although it is far distant from the expansion that has taken place in the healthcare space.

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Ins and Outs of Expert Advice ...continued from page 6

Future of Real Estate Investor's ...continued from page 7

she decided to go back to school. She decided to rent out her condo for the 3 years she would be gone. She and the tenant reached an agreement and memorialized it on a rental agreement form they found at the local office supply store. The tenant diligently paid rent each month, and everything was fine. When the 3 years were up, the tenant moved at the appointed time and the woman returned home. She had to make a few repairs and do some cleaning to put the place back in acceptable condition, so she kept several hundred dollars from the tenant's security deposit and returned the rest. A little time passed and she got a call from an attorney. He said he was representing the tenant. He said the tenant was upset that she had kept part of their security deposit so they had contacted him to see if he could help. He had reviewed the lease and it was not compliant with Chicago's Landlord Tenant Ordinance. There were 6 places where it violated the ordinance, and since it had been in place for 3 years that made 18 violations. Each violation was punishable by a statutory penalty due the tenant of twice the security deposit, plus attorney fees. So, by his calculation she owed the tenant 36 times the security deposit plus his fees. The security deposit had been one months rent, so this meant she was to return 36 months (3 years) worth of rent to the tenant and pay the attorney his fees of $5,000. Her choice would be to go to court, where the outcome would be the same except of course she would pay court costs, her attorney fees, and more for him because of his added time. Naturally the woman was highly distraught. She didn't have the money. Remember, she had been out of work and paying for school. The money that the tenant had

provide great service, and often their superior technology gives them the edge. They treat the people on their team well and are creative in rewarding loyalty. We have also seen that the future often includes not just a great team but partnerships and maybe even “crowds”. According to research in real estate businesses large and small, partnerships can be a powerful source of organizational energy and creativity. Partners can also help with funding, leads, and other skills. In the company of the future, two heads (or more) really are better than one. We also are seeing the rise in the concept of “crowd funding” both in technical terms and in the loose sense of the word where several people connect to provide deals, dollars and expertise.

given her over the course of the 3 years had been used to pay the mortgage, the taxes, the insurance, the HOA fees, etc. She didn't think that she had done anything wrong, and certainly nothing unreasonable. Unfortunately, even though that may be the case, the law in her area is very specific, and she didn't follow it.

How can you avoid this sort of problem? Do your own research at reliable places. Where do you find out what the laws are? Ask the people who make and enforce the laws. Call City Hall and find out what ordinances they have that affect rental property ownership, or building projects. Ask the Home Owners Association if they have any rules you have to follow. Ask at the County and ask at the State. Look up the laws and read them. Then keep in mind that they change, so do your due diligence periodically to make sure you are following them. Hire professionals. Add an extra layer of protection. Being too cheap to get truly expert advice is a big issue for many investors. I would like to be able to tell you that you can rely on professionals to be up to date on the laws. This isn't always the case, and especially might not be the case if you are asking them to do work outside of their normal territory or their area of expertise. But, if you make sure that they have errors and omissions insurance, that may cover the damage if they give you bad advice. One way or the other you will be better off to rely on a professional rather than a blogger. Jane Garvey is President of the Chicago Creative Investors Association.

Rental and Lease Forms, Simplified Accounting & Management Database Real Estate Journal · Spring 2017

Finally, as we release our new entry into the Professional Housing Provider Education Series, Negotiating for Success, we are reminded of one key negotiation principle: Negotiate fairly. There will always be another round (you guessed it) in the future. In the Real Estate Journal, we plan to continue bringing fresh insights into the world of real estate investing and the economy at large to help you develop a strategy that connects the old economy to the new one. National REIA has been here to help support investors for over 30 years and you can count on us to help support you now and… in the future!

Swing into Spring ...continued from page 13 Cabinets are another excellent way to increase value to a property. In areas with more contemporarydesigned properties, choose nicer amenities like hinges, soft-close drawers and cabinets that look custom-made. Also look into replacing the knobs to ones like the Delta Satin Nickel Porter Knob to make them look more luxurious. In more traditional areas, stick to updates that are classic and affordable.

Build a Beautiful Bathroom When it comes to bathrooms, buyers want to feel like money has been put into renovations. With a ‘quality over quantity’ approach, simple changes to a bathroom can make a big difference. Consider cost-effective updates like a new paint job, toilet, faucet and showerhead. As this year’s Kitchen and Bath Industry Show showcased, matte black, copper, gold and other warm-colored faucets have grown in popularity in a territory that has long been primarily white- or neutral-colored. In turn, a chrome, stainless steel or brushed nickel faucet finish or non-traditional faucet style can rejuvenate the sink area. In addition, updating the showerhead with a modern product that is WaterSense certified can make a difference for buyers who are interested in sustainability features. These can give the bathroom an updated look without the high costs. If the bathroom needs more attention, look into a new vanity. The Home Depot offers a vanity configurator to pick the perfect vanity at price that makes sense

with the bottom line. For easy and efficient installation, consider Glacier Bay vanities, which come fully assembled. These products are available in stock, which saves time and money. Now more than ever, pros are incorporating elements from across the home into the bathroom. An emerging bathroom flooring trend is tiling that breaks the long-held square and rectangular standard, with hexagon, octagon and other non-traditional geometric shapes becoming go-to’s. Shape and texture flexibility allows you to rotate and arrange tiles to form floors that tell a creative story and accent the rest of the bathroom. Using timeless and sturdy products and concepts when updating a kitchen and bathroom doesn’t have to be an expensive task. With the ROI for both rooms at or over 70 percent, putting smart, economical changes into these rooms will help bring in buyers and deliver a better bottom line. Sulema Vela is responsible for the Pro business in The Home Depot’s Southern Division, leading a team of more than 80 Pro Account Representatives in an area that encompasses 700 stores across 13 states. She has over 18 years of experience at The Home Depot, starting in 1999 as a part-time cashier while she earned her bachelor’s degree in business administration. During her time at Home Depot, Sulema has served in a variety of roles and capacities – including Department Supervisor, Assistant Store Manager, Store Manager and District Manager.

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Member Spotlight ...continued from page 10 It’s played a very big part of my close to them.What do you like Do you have a real estate investment success. The key for most about what you do? license? Yes, but I don’t currently use it.

What projects are currently working on?

you

Nothing at the moment. But, I’m always keeping an eye out for that next deal, as any good investor should.

me has been finding out about The human connection between these people from my associates those us who want to see each other and friends. It is true that word-of- succeed. I see that a lot with the mouth is the best reference. older experienced investors who have been doing this for a long time.

What are your current and future goals? Do you have a tip or advice With Pete Fortunato (right) Learn about and then build a that you would pass along to and Bill Tan (left) system to accumulate & maintain other investors? Estate Investors Group (LAREIA). How much time do you put into more cash flow investments. Goal setting is very important your real estate education? and it’s not about the money. What is your favorite selfOutside of my reading and What have been your top help or business book? How important is joining a attending the REIA’s, I go to an struggles in this business? The Last Lecture by Randy Telling people about what I do local REIA to a new investor? investor luncheon every few Pausch. It’s not a real estate or months. I also have a budget to attend several workshops throughout the year –all of which I find very valuable.

Has coaching or mentoring played a part in your success?

when they ask and then watching them do nothing. I’ve been helped by so many wonderful people and I really want to pass it forward. TThere have been a few people who have taken the initiative to learn more and I’ve become very

From personal experience, it’s been one of the best ways to gain knowledge and build my self-confidence to overcome the fears that I’ve had. I am an active member of the LA South REIA and the Los Angeles & Asian Real

investment book but it’s been very motivating.

Do you have any interesting hobbies or something unique that you like to do?

I grew up on a farm and I’m a foodie so I like trying all kinds of different foods. It’s not about quantity but quality. To me one of the best experiences as a human is to eat something delicious. I think it’s also important to keep yourself healthy with good food.

Yutaka’s first Single Family Rehab – before Helping out on the family farm

Social media accounts?

I find Linkedin is a great way to communicate. Find me at: yutaka-maseba

Yutaka’s first Single Family Rehab – during

Yutaka’s first Single Family Rehab – after

Real Estate Journal · Spring 2017

Real Estate Journal

31 Questions ...continued from page 8 8. How many would you like? 9. We’ve had a lot of interest in those, would you like to lock them? Note: Once again, the key here is silence. Ask and wait. Don’t talk first. Let the customer think. They’re adults, tell them you’re interested in their business, in helping them, and then let them answer your question. To follow up on quotes and proposals, when there is no response – to be sent in succession 1. Did you get the quote I sent yesterday after we talked? These things tend to get picked off by spam filters… Let me know if it got to you? 2. It’s been a few days and I haven’t heard from you about the quote I sent. Where are you at on this? 3. Just one final check-in on that quote we discussed, as you haven’t responded to my followups. I want to make sure I’m not

dropping the ball on this. Do you still want it? Please let me know within 24 hours, as the quote is expiring. Ask these questions throughout your day. They don’t have to be exactly these questions either. Make them your own. And, in fact, own them. Then enjoy all the additional revenue that you generate! Alex Goldfayn runs The Revenue Growth Consultancy which helps companies and sales departments grow revenue quickly and easily by implementing a system of simple communications techniques, like these questions. To discuss growing your business in this way, email alex@evangelistmktg.com or call Alex at 847-459-6322.

ClearVue Bed Bug Traps ...continued from page 4 no more bed bugs in the rooms. However, ClearVue Bed Bug Traps continued to draw out and trap more, finishing the job pro exterminators started. • A validation test by a top regional pest control company. Hundreds of bed bugs were intercepted before they could reach their human prey. • An apartment that had been sprayed weekly for nine weeks in a row. Within 15 minutes of placing a ClearVue trap, an adult female bed bug was captured. The trap is safe and easy to activate, and features secure disposability. Simply place one trap on the floor by the bedposts at the head of your bed for monitoring, or one at all four bedposts for further protection. Traps can also be placed near other furniture

susceptible to bed bug infestation. ClearVue Bed Bug Traps combine the best features of proven traps, including a pitfall ledge that bed bugs love to climb, a pressuresensitive glue floor to trap bugs forever, and of course, the active beacon technology to produce the CO2 attractant that bed bugs can’t resist. Best of all, ClearVue traps are disposable and include a sealable plastic bag for No Touch, No Escape© disposal, ensuring the trapped bed bugs remain contained without risking contact or release. ClearVue's active traps are nontoxic and pesticide-free. Each trap takes less than a minute to prepare and place, and protects your family for weeks. The traps are easy to use, discreet to deploy and are small enough to be hidden throughout your home. They measure 4”x3” at the base and are just 1” tall. The traps feature the dark colors that bed bugs are proven to love. ClearVue Bed Bug Traps are available in a Starter Pack of 2 traps, a Value Pack of 12 traps, and a Bulk Pack of 100 traps. The larger package sizes come with a volume discount. ClearVue also offers an annual subscription plan with monthly replacement traps (2 traps delivered per month). Act now to protect your family, your tenants, and your investment. As an introductory offer, NREIA members receive a 10% discount on all purchases. To order your traps, visit bedbugtraps.com and enter Coupon Code “NREIA” during checkout.

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National REIA Spearheads Landlord Protection ...continued from page 5 quid-pro-quos of Fair Housing, began raising questions. That attorney, Tarin Hale brought with him the standard practices of law in every other venue, pushing and demanding that the same BAR supported and Court accepted practices be utilized in Fair Housing cases as well. While the judge was sympathetic to the request for fair treatment under the law, ultimately the law would need to be changed. With the understanding that such egregious settlement headhunting was continuing and being promoted as a funding mechanism for other advocates around the country National REIA decided to dig in and take action. They partnered with Ohio real estate investors and the Ohio Apartment Association to bring the provisions into standard practice within the law and HUD regulations. With extensive support at the local & national levels, a bi-partisan trio of elected officials helped push a bill through the Ohio General Assembly. State Representatives Jonathan Dever (R), John Patterson (D), and State Senator Bill Seitz (R) shepherded a bill through a maze of hurdles, complaints and myths. As Ohio’s two-year legislative session drew to a close last December, their legislation was eventually added as an amendment to a related bill (Dever’s House Bill 364) that had been placed on a fast track for passage. The Senate passed that bill by a vote of 26-5 and the House concurred by a vote of 72-21. Then, edging into the new year, Ohio Governor John Kasich signed the bill into law on January 4th, 2017. The new law makes several changes to the administrative process, leveling the playing field when a charge of discrimination is filed with the Ohio Civil Rights Commission and protecting landlords from poaching. It does this by: • Making actual damages discretionary if a violation is found • Making reasonable attorney fees discretionary if a violation is found

• Eliminating mandatory punitive damages and replacing them with discretionary civil penalties if a violation is found • Allowing a landlord to recover attorney fees if the Commission finds no violation • Allows the Commission to use alternative dispute resolution

• Prohibits a change in the complaint after seven days prior to the hearing before the Commission

Not only did it level the playing field in Ohio, but also it potentially put a stop to any exportation of similar “headhunting” techniques to other states across the nation. The passage of this legislation, National REIA stands-ready which aimed at curbing to take up the fight should this harassment-for-profit by local issue surface again. fair housing organizations, was deemed a monumental success.

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