Real Estate Journal Fall 2016 by Professional Publishing, Inc

Real Estate Journal

Fall 2016

2. REIFANET; The Opportunity in Disruption

7. Partnerships: The Good, the Bad, and the Ugly

3. Smoke Detectors; What You Need to Know

8. Marketing: Hot Leads For Under a $1.00?

5. NREIA Legislative Update

10. 4 Ways to Protect Your Rental Property from Common Threats

2016 U.S. Presidential Election

6. Eight Current Trends Affecting Your Sales Growth Rate Aerial Drone Technology for Savvy Investors

13. Fix and Flip or Rent 14. Finding Deals Using Your Unique Niche

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Member Spotlight

Vol. 1 Issue 5

How Far Are You Willing to Go to Get Paid? By David Pickron

O Duke Marquiss

uke Marquiss specializes in

the acquisition and sale of “Distressed Assets;” buying homes, commercial properties and mortgage loans or judgments against real property, whether performing or non-performing. He is a member of ICOR – the Investment Community of the Rockies, in Loveland, Colorado.

Please tell us a little about who you are and what you did before getting into real estate investing: Have you ever heard of the song “Home on the Range”? That is kind of where I grew up - forty-

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continued on page 9

ver the last 20 years as an

investigator, I have seen thousands of cases where a landlord, acting purely on principle, has lost a great deal of money chasing a tenant who recently skipped out on rent or was evicted. These landlords desperately come to our firm to see what step they need to take to get their money. Though every case is different, the majority of the time this process becomes a waiting game. As a landlord you need to know that a person who just lost the roof over their head probably does

By Chris Kuehl

not have a high paying job or big fat bank account. If they did, chances are you would have been paid. And the fast food job they are working can easily be replaced, so if you try and garnish Taco Bell, they can move to Jack-in-the-Box across the street. The deeper question we need to ask is “Why did they not pay rent?” With the majority of the country having less than $500 in savings, one little bump in the road can put your tenant into a tailspin. I have seen evictions caused by divorce, a broken relationship, job loss,

continued on page 19

Are We Staring at a Housing Bubble?

here are few comments that

bring as much fear to the heart of the investor than reference to a housing bubble. The crash of 2008-2009 has by now been oversimplified by legions of analysts and commentators and now the perceived wisdom holds that this whole recession and subsequent slow growth and recovery was due to the collapse of the housing market. Granted there was plenty of damage and the housing bubble certainly played a major role but since then there has been a morbid fear of anything that looks remotely like a repeat. continued on page 21

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health concern, traffic accident, car repair, prior collection, tax levy, criminal behavior, addictions like gambling or drugs, and a plethora of other unplanned occurrences. The good news is that many of these heartaches clear up over time. People get remarried, obtain better employment, inherit money or find themselves in a better situation years down the road. So, if you feel you cannot collect right away, you might want to sit on your judgement or claim for a couple

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Real Estate Journal

REIFANET The opportunity in disruption Where more connected = more success. by Scott Whaley

ou may have noticed the rise

of AirBnb, Lyft and Uber. Like me, you may have finally decided that you needed to try them for yourself to see what all of the excitement was about. Frankly, while interesting, I didn’t get how removing the middle man and slow pace of the old technology and replacing it with a direct, high speed and more responsive feedback connection unimpeded by a middleman could be all that different. Cheaper, yes. Faster, yes. More engaged? More certain? More responsive? Come on, how great could it be? I guess that’s how so many love stories start. You never see it coming, and then, after that first date, it’s over! They make you see how far short others fell and how great it can be. That’s why I believe in the new model some call the Sharing Economy, the Collaborative Economy or the Social Business Economy.

Whatever you call it, I love it! If you haven’t already tried the companies named above and compared their service to their old market leaders, then give them a shot and see for yourself. The experience will change how you look at the old ways of doing business in a whole new and exciting way. The disadvantages and risks associated to sticking to the old ways will become obvious and I hope, as I did, you will see the absolutely astounding opportunity that awaits those who are able to

see past the outdated systems. This disruption is simply the evolution brought on by our advancing technology. Complaining or even fighting it makes about as much sense as Pony Express riders doing the same about the coming of the railroad. How does REIFANET fit into all this? Glad you asked. REIFANET is the engagement tool we use at our participating chapters to provide the one thing that all of the new practitioners who are transforming businesses like those

mentioned above are doing. They provide significantly improved value to both the producers and the consumers in not just one but usually three or more aspects. For instance LYFT, (my favorite ridesharing service) gives you greater control, more certainty of when and how you will receive your service, a more enjoyable experience and more convenient service than the old market leader, Yellow Cab. And not just for the riders but for the drivers as well. continued on page 22

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Real Estate Journal · Fall 2016

Real Estate Journal

Smoke Detectors What you Need to Know What In The World Are Photoelectric Smoke Detectors… And Why Do I Need Them? by Rebecca McLean

ational REIA has been close-

ly monitoring the change in laws about smoke and carbon monoxide detectors across the country. One case hit close to home as my son had friends that were affected. On January 1, 2013, in the University of Cincinnati campus area three blocks off campus, two college students died of smoke inhalation due to a smoldering fire. As a landlord, getting a call about a tenant dying in a fire in one of my homes is one of my greatest fears. Reading the article and hearing the account from my son, I was bothered by several things. The rental was a solid brick house – not the aging, wood framed, structure that I might first think of when I hear about serious fires. The fire didn’t appear to have been a serious blaze. News reports and the Fire Department report said the call came in at 6:48AM, trucks were in the scene in less than 3.5 minutes, they had the fire under control in 10 minutes and had confined it to one room. A fireman commented that when he arrived he was not sure they had the right address because he did not immediately see signs of fire. The firemen carried the two victims from the house 9 minutes and 50 seconds after the call first came in. What killed the residents was smoke. The fire never got near them. They were on the floor, apparently trying to escape when they were overcome with smoke inhalation. While there were other complicating factors to that situation it did draw a significant amount of attention to smokebased fatalities that are so common in house fires. Contrary to popular belief, most deaths from house fires do not occur from burns, but instead from smoke. The smokebased fatalities are a problem that could most likely be avoided with the use of a photoelectric type of smoke detector. These detectors, according to several university studies, are significantly more effective in picking up smoldering fires. With today’s pervasive use of fire retardant materials, most fires actually smolder for a significant amount of time before growing into Real Estate Journal · Fall 2016

a flaming-fire. The photoelectric smoke detectors are quicker activating with these smoldering fires and substantially the same in fast burning fires. By utilizing a single sensor photoelectric smoke detector residents may be notified between 2 and 40 minutes earlier, based on university studies. Due to this technological advantage, in an effort to help reduce smoke related fatalities, many municipalities across the U.S. are changing laws or

passing ordinances to require photoelectric smoke detectors in rental properties. Most of these ordinances require a landlord to install one photoelectric smoke detector in a bedroom, or outside of a bedroom between contiguous bedrooms. Personally, I am placing them in each bedroom, the hallways, and at the top of the stairwells depending upon the layout of the home. Many of these new laws put strict time requirements into place.

Because of the logistics and financial impact, as well as the likelihood of incident, these laws are asking single-family rentals and smaller buildings to finish the process more quickly, as student and university related fatalities have been more significantly impacted. National REIA has worked with our partner, The Home Depot and their manufacturers to address the substantial need for a dependable solution for our members, continued on page 23

Real Estate Journal

Real Estate Journal Â· Fall 2016

Real Estate Journal

NREIA Legislative Update By Charles Tassell

s the legislative year comes

to a close, there are a few key updates on our efforts. Much like situations in Ohio and Michigan, the efforts in Washington DC are headed for a possible Lame Duck session. The election will determine how much legislation goes forward. An analysis of the election, which changes regularly, has been provided by our federal lobbyist Matt Keelen of the Keelen Group. The last quarter of the year will be quite a ride. On one level our nation will be choosing a new leader, all federal representatives will be up for election and one third of the Senate. At the state level, all the state representatives and half of the state senators could change. Alternatively, the closing days of administrations are well known for ramming through as many programs and regulations as they can to clear their desk and push those last minute idealistic programs that had been held up due to gridlock, partisanship, or just a lack of time. With the recent Labor

Law on salaries being challenged, the Department of Labor may push some new tweaks with long term impact. Both the EPA and HUD are considering additional regulatory modifications on Lead Paint, and Section 8, as well as possible Department of Energy recommendations on energy standards for residential and commercial buildings. HR 5301 the Seller Finance Enhancement Act is the primary legislative effort National REIA is

focused on for the end of the year. Supporting the Seller Finance Coalition, as the largest member, in garnering support and adding sponsors will be critical in the event the bill could be included in an end of year omnibus. The bipartisan support for HR 5301’s laser focused regulatory rollback (which expands the number of seller financed properties from 3 to 24 in a 12-month period) has made it much easier to build support – much needed whether

the bill moves by the end of this year or gets carried over to the next Congress. National REIA will be in touch with members about reaching out to Congressional representatives when the timing is best to support the Seller Finance Coalition. Please be ready! With a new tool in our toolbox, National REIA has an easier method for members to engage their political representatives. Please take a moment to check out the Legislative page of the website, clicking though to the Action Center. By entering an address, name, and email, the appropriate elected official will be sent a direct communication as prepared by National and modified by the member. A simple click through process should greatly increase the ease of contacting our elected officials with clear messaging! Additionally, this tool will be leveraged to target specific state issues as we go into 2017.

2016 U.S. Presidential Campaign By Matt Keelen

presidential campaign of 2016 has been one of the wildest in U.S. history. In a few short weeks the election season will have concluded and all that is left is to clean up the yard signs. As the countdown to Election Day continues here is where we stand: Once again it seems Donald Trump has knocked conventional wisdom on its head. Most pundits predicted Secretary Clinton would have a staggering lead rolling into October and we would be looking at a Democratic landslide on Election Day. All was following the script until early August when Mr. Trump made a campaign reset from the top down and went to Mexico to meet with their President. He pulled off a stunner by appearing presidential and conducting himself well on the world stage. Voters seemed to give him another look, as Secretary Clinton’s scandals mounted: emails, Clinton Foundation pay for play, and the lack of transparency within her campaign regarding her health. he

Real Estate Journal · Fall 2016

At the end of September, the race is essentially a dead heat. Mr. Trump has pulled even or slightly ahead in nationwide polling. Mr. Trump has opened up leads in several toss up states like Ohio, Iowa, and Nevada and is even or slightly ahead in Florida. The Democrats “Blue Wall” is showing signs of cracking with states like Michigan, Wisconsin, Pennsylvania, and Minnesota being moved into the toss up column. According to Electoral College averages the race

is essentially even at 200 votes each with the rest toss up. With those estimates Trump is already ahead of Romney in electoral votes. How did we get here? Mr. Trump has tapped into the anger and frustration of many Americans towards the status quo politicians on both sides of the isle. He has motivated millions of people to engage in the election process and vote. Will this be enough for Mr. Trump to pull off another miraculous victory? That remains

to be seen, but he has proven again and again not to underestimate or dismiss him. Many of the political elite continue to make this YUGE mistake when commenting on and predicting the outcome of this race. October will be one of the most intense, bruising, political months we have seen in recent history. Both campaigns are battling for every vote. This race may very well come down to just a few hundred votes in one state as in the 2000 Presidential election. What does this mean for the National Real Estate Investors Association (NREIA) and its members? A lot! NOW is the time to roll up our sleeves and get involved. Our members can literally make a difference in who will be the next President of the United States. Please join this effort to help elect candidates that support and understand the needs of NREIA.

Real Estate Journal

Eight Current Trends Affecting Your Sales Growth We live in good and interesting times. By Alex Goldfayn

or most of you, residing in

America, we are in the most entrepreneurial country on the planet, where the amount of money we make is determined entirely by our effort and our perseverance. Effort means we must do the work. Which is the opposite of avoiding, procrastinating and perfecting. Perfection kills revenue. My most successful revenue growth clients under-perfect and over-execute. That’s because in revenue growth, quantity trumps quality. The more our customers and prospects hear from us, the more they buy from us. We must do the work. To (briefly) plan our sales action for the week, and then execute it. Perseverance means trying again when it doesn’t work the first time. In sales, no never means no forever. It simply means not at

this moment. I can trace millions of dollars of my own revenue to clients who first told me no. If I had stopped at the first no, where would I be? Not here, that’s for sure. Here are eight more trends I see taking shape in our current environment, along with my advice and experience about how to sell and market into these trends. 1. The U.S. economy is strong, and getting stronger. Operate as though your customers and prospects are expanding. And if they aren’t expanding, operate as though you will HELP them do so, in our growing economy. Many of you help your customers grow, whether you realize it or not. When you free up their times; or remove a concern;

or fix something for them: you are hleping them grow. 2. The media and political environment will continue to be negative. They get rewarded to make you feel terrible. Your customers will be more attracted to positivity than ever. Give people hope. Focus on how you can help them, not what you sell and do. People flock to sellers who make them feel hope and possibility. Make people feel like they can do it. 3. Further, in this negative environment, be an island in that storm for customers and prospects. Be the safe choice. Be the reliable choice. Do what you say, and the customers will

follow. (I’m constantly amazed that people find it a great surprise when we do what we say we’re going to do. Apparently, this has become rare in business.) 4. There has been a parting in the social media seas. In sales, LinkedIn is becoming more relevant. It is the only social media that can help you prospect and open opportunities in business-to-business sales. Equally importantly, I have clients who sell to consumers who use it for prospecting also. Most consumers have jobs, that’s why it works. Meanwhile, Facebook and Twitter are moving in the opposite continued on page 21

Aerial Drone Technology for Savvy Investors By Tom England

he advantages of using drone

providing buyers with a view of the neighborhood, its proximity to parks, public transportation, stores and schools etc. Maybe you are planning to build a structure on the property you’ve just bought. Drones can also help with the construction process as well. The potential benefits for skyhigh drone photography are enormous. In real estate they can be used to capture the elegance of a sprawling mansion, a large tract of undeveloped land, or a maybe complex of buildings & structures that just can’t be captured (or seen) with a ground-level photo. While it is possible to take aerial shots or video from a helicopter, they must fly at much higher altitudes making it difficult to get a detailed view of the earth below. And, helicopter photos will cost considerably more than those taken from a drone (think fuel, insurance time and equipment costs to name Aerial photography & video a few). Using professional drone provides not only a unique view of services makes these kinds of property for sale, but it also allows photos much more affordable for the buyer to view the surrounding all types of properties. area and gain a better perspective on Using drones for residential & how it fits into the local landscape; commercial property inspections & aerial photography for Realtors and selling homes are pretty obvious, however the same positive attributes hold true for Real Estate Investors as well. When was the last time you relished the thought of climbing a ladder to inspect a roof? How about getting a good view of that chimney? Now imagine if you could get a better look from all angles without ever setting foot on a ladder? After all, research from the CDC shows that over 300 people die each year from ladderrelated accidents.

are useful as well for all of the same reasons mentioned above. A drone can be an invaluable tool to get a bird’s-eye view or to get images that otherwise would require renting a cherry picker or climbing a very large ladder. Why pay for professional Drone Services? Well, just because you are able to find someone who has a drone with a GoPro mounted to it doesn’t mean that he or she will be competent or even professional. The last thing you need is a drone crashing into someone’s house or causing property damage – or worse, running afoul of the law. Your time is better spent focusing on your investment and watching your bottom-line. Here are a few of the requirements as currently spelled out by the Federal Aviation Administration

(FAA), which regulate both drones and the pilots who fly them. The full list can be found at www.faa. gov/uas. • All drones must be registered with FAA and all pilots must be Certified by the FAA under UAS rule part 107 • Individuals must be at least 16 years of age and pass an initial aeronautical knowledge test at an FAA-approved knowledge-testing center. • They must be vetted by the Transportation Safety Administration (TSA) Tom England is National REIA’s Director of IT & Media Production and owner of TEngland Productions - a provider of real estate photography services.

Real Estate Journal · Fall 2016

Real Estate Journal

Partnerships The Good, the Bad, and the Ugly By Jeffrey S Watson, Esq.

partnership is very similar to a marriage, and we know that today, half of all marriages fail. Partnerships have a worse track record. A significant number of partnerships don’t make it past 5 years. If that’s the case, why would you want to enter into a partnership? And if you do, what are some of the pitfalls and things you should consider beforehand? How do you set up an exit strategy on the front end so it doesn’t become a nightmare on the back end? These things must be addressed before you take the plunge into a partnership. Trust me, it’s much easier to put a partnership together the right way than it is to take apart one that has been put together the wrong way. Successful partnerships bring complimentary aspects to the team. Maybe one partner has the vision and drive, while the other has the technical know-how. Just look at the partnerships that began such companies as Apple, Google, Twitter, Microsoft, HewlettPackard, Ben & Jerry’s ice cream, and many others. While these and many other partnerships have been successful, there are many other less-well-known partnerships that weren’t successful. Why is it that so many partnerships tend to fall apart? Based on what I’ve seen, I believe the number one reason is a lack of clearly defined and agreed-upon roles and responsibilities. Who is responsible for doing what? Who has what authority? You need to get “pre-partnership counseling” from experienced, competent counsel to help you establish the parameters regarding roles

and responsibilities. Then each partner must stick to their roles and responsibilities. It’s important to remember that when entering into a partnership with someone, you are actually entering into a partnership with that person’s other partners, be it their spouse, life partner, or other business partners. The issues your partner has with others will affect the partnership the two of you have. Another thing that leads to the breakup of partnerships is the failure to begin with the end in mind. What are your goals for your business? Does each person going into this partnership have the same vision? If one person desires to build a business that is profitable enough to allow them to work just 24 hours a week so they can spend

plenty of time on their boat or the golf course, and the other person is looking to have a chain of fifteen offices in two states, their goals aren’t the same, and a partnership isn’t going to work. Many partnerships fail when business owners are looking to bring in a partner, but they don’t involve their staff in the decisionmaking process. For a business to be successful, those involved must think and work as a team. I know of one dentist who has an outstanding method for bringing new associates into his practice. New dentists do not begin by doing the job of a dentist. They may begin by doing the job of a hygienist (at a hygienist’s pay). Once they have spent time learning that area of the practice, they may be moved to the

position of an assistant in the office, and then on to working the front desk, and so on, until they have experienced and learned firsthand how each aspect of the business is run. Not only will this eliminate those who didn’t check their egos at the door, it will do wonders in building team spirit and unity in the workplace. While a partnership has its down sides, it also has some advantages over just having employees or even associates. Associates and employees often come and go after a few years, but a person coming on as a partner and part owner is making a long-term commitment to the company, and they will treat the company differently than an employee does. continued on page 15

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Real Estate Journal

Marketing Hot Leads For a Under a $1.00?

by Cyndy & Tom Dumire

f you want to optimize your

profits, you need to learn how to generate your leads efficiently to maximize your profit margin. You cannot afford to just "try everything" to get your leads. Your time and money are too valuable for methods that don't pay off with a high rate of return. You can learn how to create a website that optimizes your use of Google, YouTube, SEO, Facebook, Craigslist, Pinterest, Linked-in, and all social media platforms to link back to you with qualified leads which can get you up to 100 buyer leads and 3-8 seller leads every day. You should be able to convert one out of three of these leads into a deal maximizing your profit while minimizing your time expended.

For those new to lead generation, there are many ways you can generate leads for Sellers. Some methods include: • Driving for Dollars - With this method, you drive

Also local "Penny Pincher" papers are great way to reach a niche market that yield good results. • TV or Radio Spots - Obviously the most costly of the methods, radio or TV ads with your contact information looking for homes to sell. These ads have to be specifically targeted to your likely audience to pay off.

through neighborhoods in your favorite buying areas looking for distressed properties or homes that look vacant. Then you get the tax roll information hoping to connect with an owner who needs to sell. • Bandit Signs - This method employs the use of printed signs that advertise "We Buy Houses" with your phone number. Those signs run about $1.00 a sign and usually placed on telephone poles.

They have a habit of disappearing when borrowed as a back for Garage Sale signs. • Bird Dogs - If you are investing in an area where you know folks, you can use your contacts to scout the area and give you leads when they see someone moving out or hear of someone thinking of selling. • Newspaper Ads - Run classified ads in local newspapers in your favorite buying areas.

Traditional lead generation has always included mailing to prospects in the area you choose. Different methods have varying costs and effectiveness. • Shotgun - This method entails marketing to a specific zip code or area to see if you get any response • Targeted - This lead generation sends mailers to a particcontinued on page 17

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Real Estate Journal

Member Spotlight ...continued from page 1 two miles south of Gillette, Describe a typical work Wyoming. We were 12 miles to week for you as a real the nearest neighbor and school estate investor: meant eight kids in seven grades My typical week has me doing in a one-room country school, all a combination of raising capital, brothers, sisters and cousins. finding investments, and selling I graduated with two degrees our properties. Since I recently from the University of Wyoming; turned 70, I’ve decided to take one in Agriculture Fridays off and and the other in usually work about education. After 30 hours a week. a year of teaching Every two months Vocational my wife and I take Agriculture in a week off and go Cheyenne I was someplace that we drafted into the have never been U.S. Army and did before – during a tour in Vietnam. which I secretly When my service look for deals Before and after pics of was completed, a house rehab wherever we land. I returned to the As a habit, I try ranch for a year and then got a not to eat lunch alone and am job teaching in Gillette. After a always on the lookout for potential couple years I found out that a investors or partners. teaching salary didn’t meet my goals for life. Soon, my wife and How long have you been I purchased a one-half interest in investing in real estate? a “mom and pop” 31-unit motel. I have been in this business Later, I got my real estate license since 1974. and started selling real estate while my wife handled the daily Tell us about your operations of running the motel.

first deal:

Where is your current market and what is your focus or area of expertise?

We have lived in Fort Collins, Colorado for the past 29 years and focus in Northern Colorado and Southern Wyoming.

My first deal was ownerfinanced. I still enjoy buying in this manner today.

How do you fund your investments?

Private investors fund almost everything I get involved with. We also trade notes for property How did you get started? and property for property as well I purchased my first rental in as notes. We sometimes “overpay 1973 for $20,000 from a fellow and under sell.” Most people teacher. I borrowed $1,000 from look at a higher interest rate than the teacher’s credit union and the bank offers then the seller and then shy financed the away. A lot of remaining money can be $19,000 for 20 saved by not years at 8%. having a bank After two years approve your of renting out loan, points, the property appraisals, we sold it for environmental $23,500. To studies, etc. We me, that was a are able to buy big deal! I was properties at a addicted from great price point the beginning. Duke developed 491 lots in Dacono, Colora- because we pay My wife and I do. All built out and sold to buyers. cash and then then purchased, close when the lived in and remodeled five seller wants to - usually within 10 different homes and then decided – 21 days. to stick with a 3,500 sq. ft. ranch style home. Do you have a real My first wholesale deal after estate license? having to reinvent myself was Yes, I was first licensed in purchased from a lender for Wyoming 1974 and then in 1991 I $20,000 and double closed within became a Broker in Colorado. one week for $25,000 at a time when I really needed it. The buyer turned the property into a duplex (see nearby photo) and recently sold it for over $225,000. Real Estate Journal · Fall 2016

What projects are you currently working on?

how would you do this and why. He usually answered by saying, “You just figure it out.” A few years ago, I was taking my 5-year old grandson to Kindergarten and he borrowed my phone. I looked over and he had pulled up something on YouTube. I asked him if his dad showed him how to do that. He said, “NO.” So, I then asked him how he learned how to do that. You know what he said? “You just figure it out!” Now that’s advice that spans over 70 years! In addition, I will say that I have been coached by the best and I try to reach out to those that need help both in real estate and note investing. This Fall I will be teaching a one-day class on the “Time Value of Money” and use of the financial calculator.

We purchased a second mortgage on 51 townhomes in Cheyenne, WY. The first mortgage had already foreclosed and we redeemed the buyer from the sale. These units consisted of 25 two-bedroom 1 and ½ bath and 26 three-bedroom with 2 baths and a one car attached car garage on each unit. As units become vacant, we remodel to retail grade and then sell them. We still have 21 units that are rented and three that are currently being remodeled. We own 5.5 office buildings (part of an 8-building complex of former dental offices) in Greeley, Colorado with a total of 30,000 sq. ft. that were only about 40% occupied at the time of purchase. As we all know, times change and What are your current buildings get dated. So we are and future goals? remodeling and dividing them My goal is for the business to into more marketable sizes to be totally debt free by the end of lease out. Once this year and to they are leased, further reduce we either sell my workload or refinance down to 15-20 them and hold hours per week. for cash flow. I have a great Our latest partner who venture is is 46 years old purchasing and totally “gets judgments, Teaching a calculator it.” We will be problem to staff defaulted notes shifting debt to or notes that equity during the banks have had to write down due coming months as we liquidate. to banking regulations. We can reach out to the borrowers and What has been your top help them do a workout. With struggle in this business? our discount and knowledge of Technology. It is my worst the market place, we can do things enema (I bet you thought that that banks are not qualified to I meant “enemy”) and my best do nor do they want the liability friend. You can teach an old dog of advising a borrower and new tricks! then not have it work out. We recently purchased a $4.2 million What do you like most judgment with a large second mortgage that has more hair on it about what you do? The solutions to problems are than a good barber could cut in a always created in the cracks of year! It is one where we expect to your mind. The solutions are return multiples of the purchasealmost endless. “Figuring it out” price within 1 to 2 years. is what I very much enjoy.

How much time do you put into your real estate education?

I attend at least two note conferences per year. I meet a lot of like-minded investors and always take away some little nugget of information that profits me far more than the cost of the event plus, it is a mini vacation!

Has coaching or mentoring played a part in your success?

My dad was probably my best mentor. As a kid, I asked a ton of questions about how this works or

Do you have a tip or advice that you would pass along to other investors? Just Start!!!! I’ve known numerous investors that have spent over $50,000 attending seminars and they have yet to do their first deal. The most difficult thing to do when I was in Vietnam was getting a new guy to pull the trigger for the first time It gets easier. I have investors say, “I am afraid of losing my money.” Really? You are investing in

continued on page 23 9

Real Estate Journal

4 Ways to Protect Your Rental Property from Common Threats By Cameron Mickey, The Home Depot

magine investing all your re-

sources into a property only for it to burn in a fire, be broken into by an intruder or be flooded by a burst pipe or faulty water heater. Every good investor understands these threats and how important it is to guard your investment with preventative measures. Fortunately, the power of technology helps simplify security and awareness by allowing you to keep watch over your rental property via smartphone. Here are four smarter, high-tech ways to protect your investment:

Prepare for unexpected fire threats

The average cost to repair fire and smoke damage is about $4,000. October is National Fire Safety Month, and a good time to ensure your fire safety equipment, such as smoke alarms, carbon monoxide detectors and fire extinguishers, are in good condition. It’s also a great opportunity to consider

advanced products that can better prepare you for unforeseen risks. Three out of five residential fire deaths happen in homes where alarms either aren’t installed or don’t work, so start by checking the smoke detectors on the property. If it’s time to upgrade, look into smoke alarms that also include a carbon monoxide detector and feature lithium-ion batteries with 10-year lifespans to simplify maintenance. (editor’s note: National REIA recommends using photoelectric smoke detectors, see article on page 3). For rental units, alarms that send alerts to your smart phone are an important consideration because they can warn you of potential emergencies even when properties are not occupied. This option from Nest connects your phone directly to your properties, so you can receive alerts if there is a fire, carbon monoxide threat or low battery. Nest Protect simplifies maintenance and gives you peace

of mind when you’re away from your property. For residences that already have functioning alarms, install a remote alert system like Kidde RemoteLync for added safety. It monitors existing smoke and carbon monoxide alarms and uses the home’s Wi-Fi to alert your phone of emergencies, making it ideal for a primary residence, vacation home or rental property.

If converting smoke alarms to lithium-ion batteries isn’t an option, install a regular smoke alarm and stock up on longlasting batteries like Duracell Quantum, which minimizes the frequency with which they need to be changed. The three main causes of fires are cooking, heating and electrical malfunction, according to the U.S. continued on page 18

Real Estate Journal · Fall 2016

Real Estate Journal

Real Estate Journal Â· Fall 2016

Real Estate Journal

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Real Estate Journal Âˇ Fall 2016

Real Estate Journal

Fix and Flip or Rent By Christian Bryant

hat is the better invest-

ment within the current market? Do you ever find yourself wondering what the best investment is based on the current market and how long the current market will make that investment profitable? Most real estate investors typically have two main investments to choose from; fix and flip or buy, fix and rent. Through my position as president of IRC Enterprises (www.IRCEnterprises.com), I have the benefit of running companies that help investors in both of these markets from Portland down to Eugene, Oregon. My general advice is to always have a balanced investment portfolio, but the right

timing can make you much larger profit margins, as well as save you from taking unneeded losses. The fix and flip market has been very profitable for the savvy investors over the last few years. Our clients have typically seen 20 to 50 percent ROIs, but those margins are being squeezed. It has notably helped, though that Oregon has become a redemption rights state. This has kept most of the large, national investment companies out of Oregon, leaving plenty of deals for local investors to take on without too much competition. While other markets around the nation are tightening up and Oregon continues to be one start changing. We’ve also had the the retail sales market, which has of the top places to live, this will benefit of very low inventory on helped keep the retail sales prices high enough to support fix and flip investments. Currently there are still deals to be had as a fix and flip investor, but they are getting much harder to find unless you are willing to lower your profit expectations. In my best professional opinion, this will continue for no more than one to two years, and two may be stretching it. This is why we have been suggesting that our investors start looking for properties that they can buy and hold as rentals. As most long-term successful investors will tell you, you must be willing to be flexible and adjust your investment strategy along with market demand. Ideally, you will adjust before the market so that you can stay ahead of the game. I would suggest that all investors slowly add to their rental property portfolio over time as it will create a great, passive income stream. If you want your primary long-term focus to be on the fix and flip market, then there is a way to work rental properties into the ongoing strategy. Everyone is aware of the current rental market and how much rent has increased over the last couple of years. Most likely, rent will start to plateau within the next year or so, but it’s very unlikely that they’ll decrease. If you have ever wanted to start building a rental portfolio, now is the time to do so. Lending rates are still very low and rents are at an all-time high. This mix will make a lot of properties’ cash flow much better than in typical markets. Within our property management company, we see clients purchasing single family homes and walking into $300 – continued on page 19

Real Estate Journal · Fall 2016

Real Estate Journal

By Jane Garvey

Finding Deals Using Your Unique Niche

any real estate investors

and landlords work in a competitive environment, chasing the same deals. More and better deals and tenants go to those who get there first. Naturally, in certain markets and economic conditions, it can be really difficult to get there first. When you happen to be first in the door and are prepared to act quickly you may get a great deal, but a lot of time, money and effort may be wasted in the process. You can choose to continue to participate in the race and try to be faster, or better, or you can go straight to the finish line by working smarter.

Creativity is a big help in making the most of your prospecting efforts and money. You want to be talking to sellers who don't have a flood of mail or door-knockers offering to buy their homes. To do this, you need to stop chasing the same deals as everyone else. You need to start developing a unique approach where there are more opportunities to succeed. Look for the deals that are not on "lists", or at least not the most popular lists. Talk to list providers and you may quickly find out that 50 other investors are buying the list you were intending to mail. You can bet that not all of them

will follow through, but you still will have a lot of competition. If you decide to use "the lists" anyway, you need to do something unique. Door knocking is one thing that very few people do, so that may work in your market. Many people, only send one mailing to a list, so following up on a mailing will distinguish you from the crowd. Using a unique type of mailing piece might get your mailing open when others aren't. Trust me, in some markets the yellow paper with red fake handwriting is being used by many others - so it is no longer unique. I suggest that you send something

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useful that the owner will want to keep. This works particularly well if they are likely to be considering selling at a later date. Personally, I would rather use techniques that don't involve lists and mailings. I would rather spend the time and money developing sources of repeat business. Developing relationships with people of influence is always a good choice. There are people that you can meet who will refer sellers to you. Meeting attorneys, accountants, funeral directors, bankers, insurance agents, and others in a setting like the local Chamber of Commerce, Rotary, or other civic organization will allow you to build a relationship that lets them know what you do. Treat any customers they refer like gold, helping them in any way you can. Building a reputation for your great business practices and integrity will help you develop even more referral sources as word spreads. Your unique niche will have people seeking you out. If you are willing to take on deals that are being ignored by other investors, you can be the "go to guy", even at your local investors' association. For instance, if you buy hoarder houses, houses with foundation problems, houses with drainage issues, drug houses, houses on busy streets, fire damaged houses, or properties with other unique problems you can set yourself apart, and set yourself up for success. Let real estate agents, and other investors in your area know that you are willing to take on a particular type of problem and you will start getting referrals. Treat everyone right in the process and the referrals will continue. The number of ways to find deals is as endless as your imagination. The unique approaches we have talked about here are the tip of the iceberg. Take some time and brainstorm ideas that might work in your market, with your interests, resources and skill set in mind. The great thing about doing something different is that you will often be the one that gets the deal - because you are the only one the seller is talking to. This allows you time to put together a truly win-win deal that will enhance your reputation within the community. Jane Garvey is President of the Chicago Creative Investors Association Real Estate Journal · Fall 2016

Real Estate Journal

Partnerships ...continued from page 7 So what can you do to avoid the pitfalls that are common in a partnership relationship? The following are some important things to consider: 1. Before entering into a partnership, think long and hard about the common “what ifs.” Life happens in spite of your best-laid plans. You have to build in a plan to handle the unexpected things that will come along. What if we don’t make money? What if one of us becomes ill or is hurt in a car wreck? What if one of us gets divorced? You need to have in writing a method of how you are going to sit down as mature business owners and handle the “what ifs” that are going to come up. 2. Another critical part of that “pre-partnership counseling” must include an honest discussion about exits, valuation and timeframes. You aren’t going to work forever. When are you going to stop working, and how are you going to do it? Are you going to phase yourself out, or are you going to quit cold turkey? How are you going

to determine the value of the business for a buyout? What about timeframes when one of the partners wants to leave. Let’s say you start a company from scratch and build it into one with a value of $4 million. You can’t just call up your partner one day and say, “I’m done. I want you to buy me out, so write a check to me for $2 million.” Has a timeframe been established regarding how long the partner has to come up with the money if it’s a 50-50 partnership? 3. Have clearly defined guidelines for settling disputes that may arise. If the partnership is 50-50, is there a deadlock mechanism in place to help work out a decision? For example, if two 50-50 partners can’t agree on an expenditure of $10,000 or less, they will flip a coin. If it’s an expenditure between $10,000 and $50,000, they will go to their accountant and lawyers. If it’s more than $50,000, they will hire a third party arbitrator to look at it. I know that might be a ridiculous scenario, but my point

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is to have a mechanism in place that clearly states how the decision-making process will work, and then have the character to abide by the result if it comes to that. 4. This important question to ask before bringing in a partner to an established business may seem very odd. Is there someone working for you that you would have a difficult time firing, such as your spouse, a son or daughter, or a close friend? For example, maybe your spouse or your son is the office manager. Your business partner has to be more important than your office manager. If there is going to be a disagreement between partners over an employee, it will inevitably be with that person you can’t fire. 5. Make sure you have in place a really strong operating agreement or contract that has been structured by a competent attorney who has experience with all the things that can go wrong in a partnership. A great contract creates remedy for every possible situation you can think of (and you’ll still miss some), but that structure is a difficult build. The bad thing about these documents is that, like wills, you never know how good or how bad they are until something goes wrong, and then it’s too late. I cannot stress this point enough. You have to have competent attorneys and CPAs to help you put together a strong contract or operating agreement. 6. In partnerships where there are three or more people involved, you need to look carefully at how the percentages of ownership are divided and why it’s set up that way. Three people in a partnership with a 40%40%-20% split might not be the best arrangement for the person who only has 20% ownership and finds themselves frequently outvoted. 7. When drafting an operating agreement, you have to let the person helping you with that document give you advice. Be willing to listen to what they have to say. If you have a competent advisor with integrity, they have

your best interests in mind. When choosing an attorney or CPA, look for someone who has the heart of a teacher and is willing to work with you, not just crank out numbers. You should also look for someone who has their own business instead of someone who is an employee for someone else. In addition to having the technical knowledge, they will have the experience and understanding to see things from your perspective as a business owner as well. 8. Always do your due diligence on a potential partner, no matter who that person may be. Maybe you’ve known this person for a while and have had dinner together and talked about things, and they seem so friendly and nice. That’s not enough. Find out how that potential partner treats the cleaning staff where they work. How do they treat the servers at the restaurant where you’re having dinner? How do they talk about members of their family? Those same tendencies will find their way into your partnership as well. Your due diligence should include criminal and civil background checks, checking them out on social media, and calling their references. 9. Thoroughly look into a potential partner’s financial background. Analyze their profit and loss statements. Ask about their debt. Someone who can’t manage their personal financial affairs is not a good risk to bring into your business. 10. Don’t ask questions that only require a yes or no answer. Let them talk so you can learn more about them. Are they willing to tell you about the mistakes they’ve made and what they’ve learned from them? If not, they aren’t being candid with you. If the problems that have happened to them are always someone else’s fault, that’s a huge red flag.

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Real Estate Journal · Fall 2016

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Real Estate Journal · Fall 2016

Real Estate Journal

Marketing - Hot Leads For Under ...continued from page 8

ular type of homes like those listed on the tax roll as absentee owners or vacant homes spotted in an area • Drip - This mailing is a series of up to 7 or more times to the same properties which you would like to list if the seller might consider selling. Can't fit all those methods into your schedule? Many investors use Virtual Assistants to do the lead generation operation. Unfortunately, this can be an expensive option if you don't closely monitor the costs. You must make sure your divide the amount you are spending for a VA into the number of signed contracts. This formula is how you get your cost per lead. For example, if you are paying a VA $800 a month and it takes two months to get a deal, your lead is costing $1600. Over time, this runs into a high cost for each contact and makes the Virtual Assistant an expensive way to generate leads. All of the methods above work, some better than others, but to be a successful investor you need a reliable influx of leads at the lowest outlay in both time expended and cost. The Internet controls the flow of Real Estate now, so online programs abound. These methods can be expensive, but cost effective if done right. You need to stay on the cutting edge of technology. Be one of the early users of new ideas for best results before the larger mass of investors gets around to the newer methods.

There are a variety of Online Marketing methods to generate leads. • PPC (Pay per click) - With PPC, advertisers pay a fee each time the ad is clicked. The cost involved is anywhere from pennies per click to $50 or more. Cost depends on the competitive nature of Real Estate Journal · Fall 2016

each market. Some advertisers spend $5,000 or more per month. • PAID ADS - Paid ads are what you see at the top of Google or along the side of Google or Facebook. You can also put ads on other people's websites if they sell ad space through something like Google Ads. Advertisers create the ads to generate leads. Eye-catching ads are essential to success as is placement in the best location. Knowing where to advertise, and how much that spot is worth are necessary. • SEO - Search Engine Optimization is often done by an outside agency and is meant to make your website as keyword rich and as easy to locate as it possibly can be to your targeted audience. It can cost quite a bit, and results are not immediate, so if you cannot do your SEO, choose who does it carefully and keep tabs on cost effectiveness. Millennials have replaced Baby Boomers as America's largest generation. This younger population group do not gather information in the same old ways. They are not as likely to respond to print advertising but go to the internet by laptop or Smartphone multiple times a day to get news, shop, and find answers. Your investing business must have a welldesigned web presence to connect with this younger generation. While having a good website and advertising online are good ways to connect with buyers and sellers, the real key to getting more leads is to be an expert when it comes to social media. This area of the internet is still evolving, and there are new places every day to connect with both sides of the real estate market. Some of the best social media platforms to use include

these which are already changing the way we connect to others. CraigsList (CL) is a great place to start with 50 Billion page views a month and 50 Million users. Know when to post and follow their rules to have the most effective ads. Facebook is another “must have” site for marketing. With 1.65 Billion Facebook users each month, you cannot afford to skip this important social media marketing tool. LinkedIn has 128 Million users and is used 106 Million times per month. It is the Facebook for professionals. It is a great place to solicit high-end Seller leads and attract buyers for selling high-end homes. Pinterest is a newer, more Visual Social Market and is an excellent way to generate both Buyer and Seller leads and gives you credibility for FREE. Not all leads are created equal. How actionable a lead is determines how much trouble it will be to convert the lead to a deal. Types of leads include:

• Warm Lead - At least the seller is interested in talking to you about a deal, even if a little skeptical

Contact SEO Leads) system to achieve great results at only 18-50 cents a lead, which gives a superior return on investment. These leads are converting to approximately 1 out of 3 into a signed contract. Most investors use a variety of lead generation methods searching for the one which fits their business the best. For your system to work well, you need the leads to convert to deals. To figure your cost per lead, you must divide the amount you spent on lead generation by the number of leads which become contracts. The author is converting one out of three of these leads into signed contracts. You need to calculate what each lead is costing you and how many become contracts. You can get a lot of leads, but if you are not putting properties under contract, your business will not last long. Knowing which methods of lead generation have the lowest cost in both time and money to get the maximum number of leads converted to deals, puts you way ahead of the game. If you don't know about the ins and outs of Social Media, understand how pay per click and website ads work, or how to do SEO on your site, learn those skills by taking a course to help you. Choose the most cost efficient lead generation methods to make your investments most profitable and cash those checks!

• Hot Lead - These are the Buyers or Sellers you want. With a hot lead, the seller contacts you and chases you down to get the deal. These are the easiest and least trouble to convert.

Cyndy & Tom Dumire are members of the Diversified Real Estate Investor Group (DIG) in suburban Philadelphia. Learn more at www. successwithcyndyandtom.com

• Cold Lead - This is not one you want to pursue. You have to do all the chasing to get this lead to convert to a deal.

If you focus on "hot leads", investing will be successful and you can convert about one in three to a deal. If you add a personal touch to your lead generation system plus great SEO on your website, you should be working the system well. The author uses the ICSL (Impact 17

Real Estate Journal

4 Ways to Protect ...continued from page 10 Fire Administration. Since most fires start in the kitchen, make sure a smoke alarm is placed there along with other common areas like the bedroom and hallway. Consider getting room-specific alarms – some units for the kitchen have an intelligence sensor to cut down on false alarms triggered by cooking. Look for voice alarms in bedroom smoke detectors and light features for hallway units. Make sure your smoke alarms are interconnected so they alert each other if there is an emergency. Fire extinguishers effectively put out 80 percent of all fires. Place fire extinguishers in different areas of the property, including upstairs, downstairs, in the garage and the basement. It’s important to have the appropriate extinguisher on hand in the event of an emergency. Check the labels to see what type of fire the extinguisher puts out and place it in an applicable area. For example, “B” labeled extinguishers are used on fires triggered by flammable liquid like grease, oil and gasoline so it’s best in the kitchen. Multilevel properties should also have a fire safety ladder available to drop out the window and create an emergency exit.

which watches the home 24/7 and features eight infrared LEDs to enable high quality night vision. With a magnetic mount, the camera is easy to install and can be monitored from an app on your smartphone or tablet, sending alerts when activity is detected. In the following months, other brands are sure to have competitive products launching. Smartdoor locks are another great option to help improve security. It enables you to grant user access and send customized key codes to guests. The locks also detect activity to prevent unauthorized access and eliminate the need to re-key locks when tenants change.

icemakers that show signs of wear. Consider installing a water detection sensor, such as Honeywell Lyric, to identify moisture in these vulnerable indoor areas and send alerts to your smartphone if a leak is detected. Rheem’s Comfort WiFi Module connects select water heaters to your phone for another leak alert option. The module also features a cost-saving vacation mode that helps save energy while properties are unoccupied.

Look behind the wall

Technology isn’t limited to automated products. New innovations in insulation and building materials help produce a safer structure and a moreresponsive environment in Protect against the event of a fire or carbon monoxide threat. water damage Consider upgrading insulation, While it depends on the location drywall protection and electrical and extent of the problem, repairing water damage costs more upgrades for added fire safety

Fire-resistant drywall and updated electrical systems are other precautionary upgrades to consider. The Leviton SmartlockPro AFCI/GFC outlet provides shock and fire protection, and is resistant to electrical surges and over-voltages. Whether you’re putting the property on the market or renting it out, these safety and security upgrades help protect your investment. The home automated technology adds a layer of unmatched convenience to give you peace of mind. Cameron Mickey is the Senior National Pro Manager for The Home Depot, where he manages the company’s national accounts across a variety of industries, including property investment. Mickey is the National Account Manager for the National Real Estate Investors Association and works in partnership with corporate and regional chapters. During his 28 years with The Home Depot, Mickey has held a variety of roles, including Director of Capital Projects, Capital Projects Manager and Store Manager.

Improve outdoor security

Although there is no way to completely prevent intruders on your properties, investing in smart upgrades like connected security cameras and improved door locks will make your property more secure. Improve your motion-activated exterior lights with the Sengled Snap, which is an energy-efficient LED flood light that also serves as an HD security camera. The device sends alerts to a smartphone if activity is detected, making it perfect for empty properties. It has

than $2,000 on average. Early detection of water threats prevent expensive repair costs while also minimizing the chance of property damage and mold growth. Protect your property by identifying and addressing potential water threats – including HVAC systems, water heaters and pipes. Schedule regular

a built-in camera to capture video that can be viewed instantly or stored in the cloud. If you’re looking for an outdoor camera without the lights, consider the Nest Cam Outdoor,

maintenance and look into additional measures to help prevent water damage. Additional measures to take include replacing hoses on appliances like washing machines, dishwashers and

minimize airflow and decrease the chance of fires or harmful gasses from spreading throughout the property. Another option that can delay the spread of fires is Roxul Safe ‘n’ Sound insulation, which withstands high temperatures. The product also resists water, rot, mold and bacteria to produce the best indoor air quality.

precautions. Insulation foam sealant, like Great Stuff Fireblock, is an inexpensive option that seals pipes, cables and ducts to

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market Real Estate Journal · Fall 2016

Real Estate Journal

How Far Are You Willing to Go ...continued from page 1 years. Each state has a statute 5. Be an investigator. I personally of limitations or a judgement would call any reference expiration period so make sure you contacts on the original understand your local rules. application and creatively ask where the defendant works. I For those of you who have a few would covertly follow them judgements in your recent history, to their employment. I would here are some strategic points ask kids out front where their to consider when determining if parent works (kids rarely lie). now is the right time to collect. A couple of the most successful ways If a defendant is self-employed to receive your money is through and unable to be garnished an employment garnishment or a through their employer, you can bank garnishment. look for a one time grab out of Employment Garnishment: their bank account. If I was going for an employment garnishment I would: 1. Find your former tenant. This might not b e easy to do on your own. Our simple skip tracing tool can locate your individual’s most current address in seconds for under $5.

Bank Garnishment:

Now in the old days, Private Investigators like me had our sources at the big banks and this process was easier. In our current state where everyone is paranoid about their privacy, getting people's private information is much harder and often illegal, but don’t lose hope. The key is getting the bank account number and then knowing when to hit the bank account.

2. Drive by their current home and see if there are any visible assets, like cars. These assets may be an indicator that they If I was going for a bank have recovered financially. garnishment I would: Keep in mind they might be 1. Find the business that the living at home with parents defendant owns. so this step is simply an information gathering piece. 2. Buy something using a check. You might want a friend to 3. Go to your county records and help in this process. On the see who owns the home. If back of the returned check, your applicant has rebounded you will see an endorsement and somehow owns the home, of their bank. it’s time to collect. 4. Search Facebook, Linked In, or other online resources to see if they have employment.

3. Serve the garnishment to the bank on the 31st of the month since most people have rent money in their accounts on

this date. Add a $25 search fee with the garnishment. This $25 search fee will allow the bank to search all accounts in your defendant’s name. It is important to know if your judgement is under a personal name; you will be unable to garnish a business entity like an LLC, S Corp, or C corp. In these circumstances, you can file a wage or employment garnishment with the LLC, S Corp or C corp. Many states will allow you to obtain judgement against a company if they do not respond to a wage garnishment. This process is a little tricky so advice from a collection company or attorney in your state is advised. Additionally, you may want to record your judgements with your County Recorder’s office. Most judgments do not hit the credit bureaus unless they are filed at the Recorders office. Many times people will have to clear up their judgements if they want to buy a house or rent again, so make sure it has every opportunity to hit their credit bureau. If you want to make this sting, this is the best way to deter these individuals from doing this to a future landlord. You need to ask yourself, how far am I willing to go to get paid? Am I patient enough to wait a few years? Whatever your answer, it all starts with finding your old tenants. RentPerfect’s new skip tracing product is a great start to see how collectible your judgements are and is the first step

toward winning the waiting game. Skip Tracing is available through ISC’s online portal. One of the many advantages of being a member of National REIA is a discounted set-up fee for new accounts with RentPerfect (a division of Investigative Screening Company, Inc.). For more information about skip tracing or our complete line of services, please contact Heather at 877-922-2547 (email Heather@RentPerfect.com) or visit www.RentPerfect.com.

Fix and Fip or Rent ...continued from page 13

$500 per month net profits, even after paying our management fee. If you are unfamiliar with rental properties, this is unheard of. Typically, if you breakeven, you are doing well as you end up profitable after the tax write-offs and appreciation of property value. If you don’t like the idea of maintaining a rental portfolio for the long term and want to stick to fix and flip deals, you should consider it as a way to get through Real Estate Journal · Fall 2016

the times when the market squeezes the profits out of them. What I mean by this is that you can start holding some of your single family home deals as rentals. If you buy them and fix them up with cash, you should look at refinancing them into traditional financing and get your money back. Next, rent them out for a monthly profit as a holding strategy. The reason I only suggest using single family home rentals for this strategy is for

income and then profit again when you sell them in the future due to normal market appreciation. The main takeaway is that as an investor, the best strategy you can have is a fluid one. Don’t get stuck in one form of investing. You should always be a student of the market, willing to adjust your investment strategy based on current and upcoming market changes. There really is a way to make a profit in all market types, it’s just a matter of recognizing the proper opportunity and seizing it when the time is right.

the ease at which you can liquidate them in the future when the fix and flip market comes back. You Christian Bryant is President of IRC Enterprises and President are able to sell these to anyone, not of Northwest REIA. just investors. If you start taking on this strategy now, you’ll be able to pay higher dollar amounts on the wholesale market than the fix and flip investors you are competing with, almost guaranteeing that you will win at auction when you bid. You also get to profit off the monthly

Real Estate Journal

Real Estate Journal Â· Fall 2016

Real Estate Journal

Eight Current Trends ...continued from page 6

direction, becoming less useful, especially for business-to-business sales, by the week. 5. In a world where everyone can shout anything at anyone, always, it’s easier than ever to stand out. He or she who communicates personally the most, wins. Let your customers and prospects hear from you. Call. Email. Write. Fedex. Meet. Let them see you and hear you. 6. Along these lines, amazingly, the personal phone call is going the way of the dinosaurs and Blackberries. The average salesperson spends 4 hours per week on the phone. Think about that! If you want to grow your sales, call customers and prospects. What do you think will happen if your phone time goes up from four hours to, say, 10 hours a week? That still leaves 75% of work week for nontelephone activities.

Professional sales people would rather email than call. Why? Because of fear. Telephone rejection is far more personal than email rejection. A little personal effort, in the customer’s best interests, will help you close more sales, and easily. 8. Customers are no longer asked what’s working well. Customers are rarely asked for referrals. Customers are rarely told what else they can buy from us. Quotes are rarely followed up on. Why? Because of fear. Handle the fear, do the SIMPLE work that others aren’t doing, and you’ll instantly stand out and close more business. Alex Goldfayn runs The Revenue Growth Consultancy that helps companies and sales departments grow revenue quickly and easily by implementing a system of simple communications techniques. His latest book, The Revenue Growth Habit, was named the 2015 Sales Book of The Year by 800-CEO-Read. Visit www. evangelistmktg.com for more information

7. With advance apologies to our young readers: There is a laziness seeping into sales. People – especially the younger working generation – would rather tweet than have conversations.

Text REALESTATE-ROI to 44222 to receive a digital copy of this year's Real Estate Opportunities in Investing (ROI) Finding Investing Success in Today's Housing Market Real Estate Journal · Fall 2016

Are We Staring at a ...continued from page 1

It can be argued that there is another bubble right now but at this stage it looks far less threatening than those in the past. This doesn’t mean it can be ignored and these developments tend to take on a mind of their own as far as the markets are concerned. In June there had been 50 consecutive months of home price appreciation and according to the latest Case Shiller Index that streak is still alive and well. Prices have risen by 33% from the bottom reached in 2012 and that is only 1.1% off the record set. The average price is now in excess of $265,000 and still climbing. What makes this different from the drastic run-up that preceded the economic collapse is the motivation for the hikes. The factors at work this time are “normal” and to a significant degree they reflect the past ten or so years. The three factors that have been most cited for the hike in the price of homes has been the fact there are severe housing shortages in most of the fast growing communities in the US, mortgage rates have been consistently low and the rate of unemployment has been falling and consistently. This latter factor means that more people are in a position to buy a home or at least feel that they have the security to try. There are plenty of pitfalls that will have to be watched closely. If the interest rates set by the Fed start to move up there will be pressure to hike mortgage rates as well and that will start to freeze out some potential buyers. There is also the fact that lenders now are far more cautious than they once were and are not making it easy for new buyers – besides the fact that there has generally been an increase in the down payment required as the price of these homes go up. There are perhaps three issues that could create problems in the sector as a whole – beyond those cited above. First, there has been a severe shortage of people qualified to build homes and that has been

a major factor in the shortages of new homes in places that have seen substantial growth. It has been noted that house construction in Dallas and Houston is as much as nine months behind simply due to a lack of workers. A second major concern has been the ability of the millennial to engage. They have been slow to buy homes anyway and there are several theories as to why. Some assert that they are starting families later and thus not interested in moving out of the loft or their parent’s basement. A big reason for their reluctance is simply that they have too much debt and can’t get approved for that mortgage. This is a problem that will extend into their 30s – whether they plan to have families or not. The third issue is that existing homes are pressuring the new home market as the Baby Boomer elects to downsize. The drive for the Boomer seems to be locating a cross between Club Med and ER as far as their senior living choice is concerned and that leaves a great deal of housing stock for a next generation. The problem is that it is very often in the wrong city, the wrong neighborhood and lacks what the new buyers want. The housing sector is not staring at a bubble created by poor lending decisions and people grabbing homes they can’t afford – this is a bubble caused by traditional issues but that doesn’t make it any easier to deal with. Stay tuned.

Real Estate Journal

REIFANET: The Opportunity ...continued from page 2 It’s more than just a better, cheaper, faster service. It’s more engaged and more responsive to feedback; this leads to a better experience on just about every level for both providers. In REIA/ REIFAs case that would be lenders/ vendors AND borrowers/real estate investors. This explains the speed of adoption and rise to the top of new players who are displacing old market leaders with breathtaking speed. The new way is so compelling to the most important players because it provides massive value advantage to both ends of the transaction. The providers and consumers are getting a huge value-add. This is the critical secret sauce of these new business models. They rely on large-scale adoption

of their product or service, which totally disrupts the old market leaders pricing, technology and value proposition. Therefore, it’s our bet that we are right at the perfect moment when technology has now gotten advanced enough to turn peerto-peer investing, lending, borrowing and meeting into the PRIMARY method of exchanging, networking and transacting the overall real estate investing business. REIFANET is how any group or individual can connect with another member group or individual in a faster, more robust, and interactive way than ever before. So, how it works is if one either facilitates or uses a faster and better connection, then you succeed more. If you do the opposite, you

struggle more. This also explains the falling incomes and status and struggle of the middleman. The intermediary has gone from being a valuable resource to a barrier or obstacle that no longer helps improve things but in fact, makes things worse. It’s hard to beat the internet and it’s getting even harder on a daily basis. This also explains why people are flooding into the fastest growing segment on the internet today: live streaming, interactive video. REIFANET uses live streaming via the Google Chromebox network. It allows us all to leverage our existing meetings, knowledge and expertise so that groups and vendors and attendees are no longer limited by what is geographically or chronologically convenient and available. Not only that but it creates a secure and

Strengthening Our Foundation

Think Big Solutions. Think Big Results. Rentals.com is always creating ways to enhance our customer’s experience, and ultimately deliver more leads. Stay ahead of the game by posting your listings on our sites to gain maximum exposure to renters. Online or on the go with our mobile app–we’re taking the burden off your shoulders with the Rentals.com Family of Sites. From a website redesign to increased SEO efforts, we’re doing everything we can to strengthen our foundation and bring you qualified renters. ©2015 RentPath, Inc. All rights reserved.

exclusive environment to access and use this content that you simply can’t get anywhere else. How does it work, specifically? It is all done through the simple and easy to use, Google Chromebox. By using new Google back-end protocols and Logitech’s advanced Hi-def PTZ cameras (and lots of testing thanks to adventurous early adopting real estate investing leaders) we can now deliver multi-way, the information, the connection, the speed, and the costs required to make face-to-face meetings or networking an option, not a requirement. The new formula for success is “More connected = More successful”. It’s all about your ability to find and make connections. In today’s’ world he…or she…. who has the best, fastest, most convenient and most useful connection is going to have all the resources they need. Think about it. All of the new successes have utilized the new technology to provide a significantly better, more valuable (as defined by the producers and consumers) connection to one another. With REIFANET, that’s exactly what we aim to use. Set up is easy, sign on is seconds away and signing in is simple; it stays connected with your Google account so you never have to truly disconnect. As a real estate investor or vendor this means time and location are now tiny obstacles instead of unscalable impediments. It opens up every endeavor we normally transact on a face-to-face basis into something we can do anywhere – even if we only have a smartphone connected to the REIFANET. Welcome to the new world of the networked real estate investor who can tap into expertise, deals, funding and support with a quality once reserved for face-to-face interactions offered through your existing REIFA/REIFA chapters and online everywhere. Hold onto your seatbelt as we disrupt, connect and transform an entire industry, as well as your life in the process. Connect with your future family of connected real estate investors and let us know how you want to connect. As a connected real estate investor your success will translate into our success and the cycle will repeat with each new member and their successes. It works with the others….it will work for us. As investor, funder, leader, expert. It’s not my association….it’s OUR association. To Your Future and Our Future. For more information about REIFANET please visit www.REIFA.Net

-StrengtheningFoundation_Columns.indd 1

11/20/14 10:51 AM

Real Estate Journal · Fall 2016

Real Estate Journal

Member Spotlight ...continued from page 9 Real Estate and you are afraid of losing all of you money or just a part of it? No matter how long you’ve been doing this and how many deals you’ve done, there are going to be some where you’re going to lose money. I really wish (like everyone else I’m sure) that I could only pick the ones that made money. But that’s not how it works. However, the only way

What is your favorite selfhelp or business book? A Whack on the Side of the Head by Roger von Oech. It is a book that is short, easy to read and helps get rid of Stinkin’ Thinkin’….You will never look at things the same again.

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

I love to grill and entertain my grandkids, friends and family.

Lunch with a World War II veteran… You have to give Back.

I have lost all of my money was by borrowing from a bank. My mother always told me that I could end up losing all of my money. She forgot to tell me that you can go past zero. I did that with an overleveraged deal that didn’t work and then ended up with a negative net worth for about two years. I suggest taking a look at doing partnerships, 100% seller financing at 0% interest, equity sharing, etc.

How important is joining a local REIA to a new investor?

Duke with his grandson. It takes two to build a “Fairy Garden”

Does your business have a website?

www.LoanVestors.com and www.dskhomedeals.com

Social media accounts • Twitter @Dukeofdirt – I don’t tweet often but when I do, it is usually funny. • Linkedin- Duke Marquiss

This is the best place to go no matter what your experience level is. You meet like-thinking people, and can get or even give help to others. My dad always said that experience was the best teacher, especially if it was someone else’s! My scars are your scars without having to have a band-aid.

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Smoke Detectors ...continued from page 3

independent rental owners. In most areas there will be an annual certification that the detectors are working. The process for this will most likely be the posting of a selfsigned and dated certificate in an area by a fire extinguisher or boiler certificate at the property. Please consider that ALL smoke alarms expire after 10 years. If the smoke alarm does not have a date stamped on it, it most likely predates the 10 year expiration and will be considered “expired” by fire inspectors in any region. Some other ways to make the detector longer lasting are lithium batteries. These long-life batteries can help minimize the maintenance required for battery change outs and reduce the time it takes to perform annual certification. Most lithium batteries currently last about 6 years. 9-volt Lithium batteries are less likely to be “removed” by tenants, as there are fewer uses outside of smoke alarms for this style of battery. Longer lasting batteries are expected to enter the market later this year – updates will be announced as they become available. Many detectors have a pin near the battery case, which can help deny or delay a tenant access to the battery.

generally more responsive to fires that begin with a long period of smoldering (called “smoldering fires”). Photoelectric-type alarms aim a light source into a sensing chamber at an angle away from the sensor. Smoke enters the chamber, reflecting light onto the light sensor; triggering the alarm. Combo-Units: Please note the use of the term “single sensor” is not without purpose. There are combo-units that include both ionization and photoelectric sensors. However, these combo units consistently react slower than single sensor units in various tests, and are not recommended. To be brief, they are more costly and less effective. Although many of the changes in the law call for photoelectric installation, for each type of smoke alarm, the advantage it provides may be critical to life safety in some fire situations. Fatal fires in a rental home, day or night, include a large number of smoldering fires and a large number of flaming fires. You can’t predict the type of fire you may have in your rental home or when it will occur. Any smoke alarm technology, to be acceptable, must perform acceptably for both types of fires in order to provide early warning of fire at all times of So what are the specific the day or night and whether you are asleep or awake. differences in smoke For best protection, NREIA detector types? Ionization Detectors: typically recommends both (ionization and these are disabled at least 20% of photoelectric) technologies be used the time due to nuisance (false) in rental homes. We also encourage alarms. Ionization-type smoke having a working and tested alarms have a small amount of carbon monoxide detector and fire radioactive material between extinguisher in your rentals. two electrically charged plates, which ionizes the air and causes current to flow between the plates. When smoke enters the chamber, it disrupts the flow of ions, thus reducing the flow of current and activating the alarm. Ionization detectors will often have an atomic symbol on them for their (exceptionally small) radioactive ingredient, while photo-electrics will typically have “P” in a square stamped on the case. 90%+ of all detectors currently being used are ionization. Photoelectric smoke alarms: 23

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