THE INVESTOR SHERIFF SALE SUCCESS! Presented by Multiple Speakers
Ever wondered how to buy property at a sheriff sale? Buying a foreclosed home can be a great bargain…IF you know the secret process! Well now you can learn the SECRET! On Thursday, April 6, 2017, join us in welcoming Sergeant Rick Snow and Corporal Jeff Toerner of the Hamilton County Sheriff’s Office as they divulge the secrets of sheriff sales. During this meeting, they will be covering: • How properties progress through the courts and wind up at sheriff’s sale. • The various types of property sales conducted by the sheriff. • How to locate upcoming and past
sale records. • And much much more! You won’t want to miss this! Please join us on April 6th from 6-9 at our NEW LOCATION at the Ramada Plaza, 11320 Chester Road, Cincinnati Ohio, 45246!
JOIN US EARLY AND ENJOY HEARTY HORS D’OEUVRES!
The Real Estate Investors Association of Greater Cincinnati (REIAGC) has added food to our general meetings! Please be sure to join us early for hearty hors d’oeuvres and networking fun with your industry peers.
JOIN REIAGC VENDORS AT THE INVESTOR SOLUTIONS SHOWCASE! Formerly known as the Vendor Showcase, the Investor Solutions Showcase has been slated for May 18 from 6 PM – 9 PM. We are keeping some the traditional things and supplementing them with new concepts. The event will be held at the Ramada Plaza Hotel at 11320 Chester Road, Cincinnati, Ohio, 45246, which is directly across from the convention center. We will have the same great prizes and familiar faces but will also introduce you to some new folks as well! The Investor Solution Showcase is the premier place to find the real estate service or product that you need to keep your business going and be successful! Vendors from all areas of real estate services will be in attendance PLUS it will be fun and potentially lucrative! The traditional door prizes and mega prizes will be given out again! Those prizes add up to hundreds of dollars and are given away all in one night! Plan today to join REIAGC for our Investor Solutions Showcase! Contact the REIAGC office at 513-407-3137 if you have any questions or would like to be a vendor!
WE’RE MOVING THE MEMBERSHIP MEETINGS!
Here at REIAGC we are proud to say that we have grown so much in the past year that we need more meeting space! Starting April 6th, 2017 our meetings will be held at the Ramada Plaza located at 11320 Chester Rd, Cincinnati, OH 45246. We hope to see you at our next general membership meeting at the Ramada Plaza and as always be sure to come early for hors d’oeuvres and conversation. See you there! 10945 Reed Hartman Hwy | Ste. 113 Cincinnati, OH 45242 P: 513 407-3137 www.cincinnatireia.com
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2017 BOARD OF DIRECTORS & COMMITTEE CHAIRS
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APRIL 2017
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President Anita Johnson 513 334-0444
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Vice President Drew White 513 207-9846
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Secretary Gina Bowden 513 477-4132
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Treasurer Scott Ellsworth 513 272-8400
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Board Members Ben Bauer Eric Kottner Narendra Mundhe Cheryl Long Linda Hull Tom Terlau Association Manager Nancy Terry 513 407-3137 Cincinnati REIA 10945 Reed Hartman Hwy | Ste. 113 Cincinnati, OH 45242 P: 513 407-3137 | F: 844 734-2472 www.cincinnatireia.com
Disclaimer
The REAL ESTATE INVESTORTM is published 12 times a year by the REAL ESTATE INVESTORS ASSOCIATION OF GREATER CINCINNATI. The subscription cost is $120 per year. First class postage paid. © Copyright 2016 by the REAL ESTATE INVESTORS ASSOCIATION OF GREATER CINCINNATI. All rights reserved. Reproduction or dissemination in whole or in part, in any form whatsoever, is expressly prohibited. Printed in the USA. The information contained herein and information shared at meetings and events is believed accurate, but it is not guaranteed or warranted in any manner. The information is provided with the understanding that neither the author(s), program speaker(s), nor the publisher (or its directors, officers, employees or agents) are engaged in rendering legal, accounting or other professional advice. REIAGC does NOT pre-qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. We recommend you perform your own due diligence and seek appropriate legal, accounting, or other professional advice before making any investment.
2015 2 | The Investor ||August April 2017
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REHABBER’S FOCUS GROUP
6 pm Slatts 4858 Cooper Road, Cincinnati 45242 Joe Davidson Eric Kottner
WHOLESALING FOCUS GROUP
6:30 pm | Perkins 7108 Hamilton Avenue North College Hill Michelle Clayton - 513 400-4937
GENERAL MEETING
6 pm - Women In Real Estate Panel 7:30 pm - Sheriff Sale Success Ramada Plaza, 11320 Chester Road
FRIDAY MORNING MEETUP 9 am to 11 am Crown Plaza Blue Ash 5901 Pfeiffer Road, Blue Ash Linda Hull - 513 549-7821 Cheryl Long - 513 429-2583
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INVESTORS LUNCH
11:30 am - 1 pm Century Inn Restaurant 10675 Springfield Pike Dave Jasper - 513 942-5110 or Max Arroyo 513-772-5736
LANDLORD FOCUS GROUP 6:30 pm Crosley’s Sports Cafe 4901 Vine Street, Cincinnati Scott Ellsworth, 513 659-5531 Jim Shapiro, 513 515-6717
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GENERAL MEETING
6 pm - Intro to Rentals: Lease Options and Land Contracts 7:30 pm - Best Rehabbing Tips and Techniques Panel Ramada Plaza, 11320 Chester Road
LANDLORD SATURDAY
9 am- How To Make More Money From Your Rentals presented by Jim Shapiro Clarion Cincinnati North 3855 Hauck Rd
CREATIVE BUYING AND SELLING FOCUS GROUP
6:30 pm Perkins, 7108 Hamilton Avenue North College Hill
NORTHERN KENTUCKY FOCUS GROUP
6:30 pm at PeeWee’s Place 2325 Anderson Road Crescent Springs, KY Brandon Brewer - 859-240-7339 Tom Terlau - 859-653-6412
FORECLOSURE NOTE BUYING SHORT SALE FOCUS GROUP
6:30 pm, Wendy’s Restaurant 5909 Mulhauser Road Deb Meyer - 513 266-4008 or John Dohtery - 859-653-3290
MOLDING THE MILLIONAIRE MIND Crowne Plaza Dublin 600 Metro Pl N Dublin, OH 43017
MISSION STATEMENT
OF THE REAL ESTATE INVESTORS ASSOCIATION OF GREATER CINCINNATI (REIAGC) • Encourage our members’ success through education and professional services • Represent REIAGC members as positive, ethical contributors to the economic and the social well-being of our community
PRESIDENT’S CORNER
By Anita Johnson, REIA of Greater Cincinnati President It’s April, and we most certainly welcome the spring season and the “newness” that it brings! The weather warms up, the days are filled with sunshine and start to become longer, and there’s just an overall renewal or rejuvenation that takes place. Never mind the fact that in order to get to this point that we all had to spring forward and lose one hour of sleep; we all seem to just accept that fact as long as we get everything else that comes with it!
with it all of the benefits you’ve come to love at the Crowne Plaza plus so much more. I’m absolutely certain you will LOVE the new meeting location. So come on out and join us on Thursday April 6 and let me know what you think! Oh, and be sure to tell a friend and bring a friend for this exciting meeting! April marks the start of the second quarter of the year, and an opportunity to assess the first quarter and whether or not you’re on track with those goals you set at the beginning of the year. Take time to celebrate reaching your goals, and make adjustments where necessary. Here are just a few of the notable first quarter accomplishments here at REIAGC: • Kicked off our monthly series of Saturday sessions to bring you the education you need to build and grow your real estate business, covering topics of How to Get Started Right and Right Now, Note Buying and How to Find Deals (#1 request from the 2016 survey)
Well, if you haven’t noticed, renewal is taking place at the Real Estate Investors Association of Greater Cincinnnati (REIAGC) as well. Starting with our first General Member meeting on April 6, our meetings will be held at the Ramada Plaza in Sharonville on Chester Road. Well wait, you might be wondering, “Isn’t this the same time of year that we moved last year?” and you would be • We listened to YOU - our members - and added a new right. Yes, last April (2016) we moved our meetings from focus group: The Rehabber’s Focus Group is in place the Hamilton County Community Action Agency (CAC) and the first meeting was held on Monday, March 6. in Bond Hill to the Crowne Plaza in Blue Ash. The move was a great move for us and the location has served us Finally, REIAGC is always looking for volunteers, so if well. you have an interest in helping with any one of our events please let us know. As I always say, “everyone has someHowever, when things change - as they so often do - we thing to contribute.” must also change. We must always have a stable and permanent home for our meetings, and as such it was Have a great April!! determined that the Crowne Plaza would no longer meet our needs. The move to the Ramada Plaza will bring Anita Johnson
FRIDAY MORNING MEETUP MOLDING THE MILLIONAIRE MIND Have deals to sell? Services to provide to real estate investors and landlords? Or just want some time to just hang out with fellow real estate investors, landlords, and service providers with no agenda except making connections? Then join our Friday morning meetup—it’s free and open to the public. This morning networking meeting doesn’t have a topic, but just the chance to meet with fellow entrepreneurs and service providers. This meeting will take place the Friday after the 1st Thursday of every month.You’ll meet great, helpful people and make connections to build your business. A breakfast buffet is optional and available for purchase - prices are $12 for hot buffet and $8 for cold buffet, available in the lobby/atrium area until 10:30am. Our next meeting is scheduled for Friday, April 7, 2017, from 9 am to 11am at the Ramada Plaza located at 11320 Chester Road in Cincinnati 45246. The Investor
The Wild, Wonderful Women of Real Estate invite you to a weekend of education and inspiration you'll never forget! This session will bring you 8 inspiring presenters on nine money making topics: • How to find more great deals than you can handle • Get pretty houses with no money down • Help sellers in foreclosure (and make a fortune doing it) • Make $10,000 in the next 30 days • Rehab houses for a 5-figure profit • Automate with V.A's • Grow your wealth Join us for this valuable event April 28 - 30, 2017. Visit the REIAGC Calendar of Events for more information! 3
ADDITIONAL MEETINGS AND COURSES IN APRIL APRIL 6TH MEETING: 6:00 PM WOMEN IN REAL ESTATE Join us on Thursday, April 6 at the Ramada Plaza beginning at 6 pm for the early meeting featuring women in real estate. APRIL 20TH MEETING: 6:00 PM INTRO TO RENTALS: LEASES AND LAND CONTRACTS Join us on Thursday, April 20 at the Ramada Plaza beginning at 6 pm for the early meeting featuring an introduction to rentals including leases and land contracts.
property managers primer on how to choose the right property, how to screen applicants correctly, and how to manage right in order to profit. Jim will teach these lessons along with how to remain compliant with fair housing as well as follow the landlord tenant laws. If you are a landlord and need a refresher or are thinking about becoming a landlord, this is the session for you! Join us at the Clarion Hotel Cincinnati North in Sharonville for this must see educational event! Register today by calling 513-407-3137 or online at www.CincinnnatiREIA. com see you there!
APRIL 20TH MEETING: 7:30 PM BEST RAHABBING TIPS AND TECHNIQUES Join us on Thursday, April 20 at the Ramada Plaza beginning at 7:30 pm for the main meeting featuring the best rehabbing tips and techniques. APRIL 22ND WORKSHOP: HOW TO MAKE MORE MONEY FROM YOUR RENTALS WITH JIM SHAPIRO Join REIAGC on April 22nd for this eye-opening education session targeted at landlords or those wanting to know more about being a landlord! This event will be a
Inco�e �rotec�on with no �edical underwri�ng
�ccident and �ri�cal Illness �rotec�on
Life insurance with guaranteed rates to 100 ‐ Guaranteed Issue*
*Call for details: Paul at 800.333.4638 ext. 203 4
April 2017
WELCOME NEW AND RENEWING REIAGC MEMBERS! REIAGC Would like to welcome its new members and thank its renewing members in the month of February: Carli Minge, Icon Property Rescue Jennifer Tso Michael Urban Darrell Harden Jevontee Wright Foster Weisinger Tami Wright Kelly Clark Wanda Bruce David Hildebrandt Sandra Pohl, Ninja Enterprise Group LLC Monique Hebert Anthony Clark Mark Thompson Jerry Wright, T&J Ventures Paul Noia David Wiedmeyer Alexander Vaughn, VIG Property Development, LLC Erica Hellmann John Bauer, Bauer Property Solutions Beverly Winkler, QCH Rentals Donese Carr, Hollis Commercial Funding Walt Wollet
Marc Steiger, Hartlaub CPA Advisory Group Holly Lowry, Lowry & Associates Javier Montoya Brandal Evans Patricia Nagelkirk
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CAN YOU READ A BPO? THE REIAGC FORECLOSURE NOTE BUYING INTRODUCES NEW SHORT SALE SUB GROUP REHABBER’S FOCUS GROUP! You’ve gotten the title report back on your note. It has a BPO included with it. These are the keys to know if your note will be a good deal. But can you read a BPO? What is a BPO anyway?
You’ll be able to do just that after this month’s Note Sub Group Meeting. See real examples and learn to read that …what does that stand for again? Brokers Price Opinion. It’s just an inexpensive appraisal that comes with or should come with all the notes you buy. It helps give a range of the value of the property and you can then determine what the value of the note you’re buying (or selling) should be. Let Deb walk you through some actual BPOs so you’ll be able to read them with your next note! Don’t miss Deb on Thursday, April 27 at the Wendy’s Restaurant on Mulhauser Road off of the I-75 Union Center Exit in West Chester. Dinner starts at 6:30 pm and Deb will start at 7:15 pm. If you’re buying notes or thinking about buying notes, you’ll want to know how to do the best due diligence with your notes and BPOs! See you there! For more information, Call Deb McMillan Meyer 513-266-4008 or John Dohtery 859-653-3290
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April 2017
So you want to fix and do what? Whether it is flip or landlord, it doesn't matter because REIAGC is bringing you what you need to take it to the next level...welcome to the Rehabber's Focus Group! Lead by Joe Davidson and Eric Kottner, this group will be meeting on the first Monday of each month to share information on how to fix and flip or just fix it! Learn what to do next, once you have it under contract! This group is open to all REIAGC members so plan to attend! Location: Slatts, 4858 Cooper Rd., Cincinnati, OH 45242 Time: 6PM
UNDERSTANDING INSURANCE BY TIM NORRIS
I heard yet another horror story this week about an investor who lost a house to a fire, then found out that his insurance didn’t actually cover the loss. Why? Because it was a homeowner policy, in the name of the former owner, who’d sold the property to this investor subject to the existing loan. Since the property was neither owner-occupied nor in the name of the actual owner, the insurance company just said, “Tough luck” despite the fact that all the premiums were up to date. I meet so many people who have no idea what their insurance covers or even whether it’s the appropriate type in the appropriate name. And I meet even more who are paying $50-$60 more per MONTH than the average investor in their area. If you own rentals, I suggest you take out your policy and see how it compares to what Tim recommends in this article. I did that, and saved over $1,600 in insurance premiums last year. Tim Norris is the owner of www.NREInsurance.com , a company that specializes in working with investors and writes policies in 17 states. To find out if yours is one, contact Tim
criterium-cincinnati@fuse.net
at (888) 741-8454 If one of your single-families caught fire last night, are you certain it is insured properly? If a spring storm blew the roof off of your 12-unit apartment building, would you have coverage for your loss-of-rents? Is your subject-to exposure protected? When it comes to insuring your investment properties, it is best to know what protection you have, or don’t have, before a claim! It is always nice to save a few dollars to add to your net income, but make sure you are aware, and more importantly, comfortable with your coverage levels and options. LIABILITY LIMITS Always carry as much liability protection as you can afford. As a minimum, you should carry $1,000,000 per occurrence. The larger your portfolio, the more liability protection you should have. Surprisingly, there is a minimal premium charge in most cases to double your protection. An umbrella policy is a method to provide liability coverage beyond the standard $1,000,000 or $2,000,000 limits. An umbrella is usually more cost-effective when you have more than one type of liability exposure.
513-474-9600
BUILDING EVALUATIONS BY LICENSED PROFESSIONAL ENGINEERS • Residential and Commercial Inspections • Structural Inspections • Reserve Studies
Max J. Arroyo, Jr. Vice President Investment Property Asset Manager Berkshire Hathaway Profesional Realty
Commercial Services First Circle Property Management
7311 Tyler’s Corner Place First Circle Property Management
West Chester, OH 45069 Direct: 513-772-5736 Leasing and Service: 1-888-288-5912 E-Mail: Marroyo@bhhspro.com www.firstcirclepm.com A member of the franchise system of BHH Afiliates, LLC
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OTHER STRUCTURES AND PERSONAL PROPERTY COVERAGES Don’t forget to protect against loss of detached structures, such as garages, sheds, and outbuildings. Some policies automatically include limits for these. Also remember to protect items in the units such as refrigerators, stoves, and window air conditioning units. Again, some policies may automatically provide built-in protection for these items. ORDINANCE AND LAW COVERAGE This provides protection for additional costs you may occur in order to bring your damaged property “back to code”, as it is repaired from a loss. As time passes and building code changes, most properties are “grand-fathered”. However, the repairs that are inspected by the governing municipality are required to be to current code. Hard-wired smoke detectors and handicapped accessibility are two such examples. Without the Ordinance and Law endorsement, such work is typically not covered under your policy. Older properties and multi-unit properties are more at risk for this situation. LOSS-OF-RENTS/BUSINESS INCOME COVERAGE: This provides coverage for your lack of rental income, if your tenants are forced out of your property due to a covered loss. Some policies have built-in coverage to a certain time limit, such as 12 months. Other policies may have an endorsement you must purchase at specific levels of coverage. Either way, this is protection all property owners should
have. DEDUCTIBLES Simply stated, the higher your deductible, the lower your premium. If you are a multi-property owner, and your units are insured under separate policies, your deductible will apply, per location, if you are on what is typically referred to as a “package” or “blanket” policy, your deductible usually applies per occurrence. This could be a big difference, out-ofpocket, in the event of a local catastrophe such as a tornado. EARTHQUAKE, WATER BACKUP AND FLOOD COVERAGE Most policies have exclusions for such losses. You can buy these coverages back through separate endorsements. Make sure you understand how each coverage may apply, respective of your chosen insurance carrier. This will ensure you can make an educated decision on whether you should have these coverages. INSURING THE PROPER ENTITY If you have purchased a property subject to someone else’s loan, make sure you protect YOUR (or your entity’s) interests. It is not worth sacrificing the proper protection to avoid the dreaded “due-on-sale” clause. The entity that owns the property should be the first-named insured. The first-named insured is the primary recipient of policy benefits. Additional insured and loss-payee endorsements may suffice in certain situations. However, as a general rule always aim to be the first-named on the insurance contract. CHOOSING AN AGENT Always work with an Agent you can trust and who truly understands the needs of the real estate investor, regardless if they are “captive”, or “independent”. An Agent that is familiar with our business and willing to take the time and explain your protection needs for your situation, even if they can’t offer the policy themselves. We all like to save money, but you purchase insurance for protection, so it’s crucial that your agent gets the right insurance for your unique needs as an investor. Make sure you understand how it works, before you need it!
Building Value LLC 4040 Spring Grove Ave. Cincinnati, OH 45223 (513) 475-6783 www.buildingvalue-cincy.org 8
John C. Wagner | 513.857.9179
April 2017
10 REASONS WHY YOU MIGHT WANT TO CONSIDER A COMMERCIAL POLICY BY TIM NORRIS
Commercial insurance policies, as opposed to personal policies, add a lot of flexibility to your insurance needs as an investor. In most cases, I recommend that anyone who owns rentals and other investment properties get a commercial policy instead of the more typical personal policies, and here’s why. 1. Many commercial forms will automatically include coverages that you need such as rental loss and additions and alterations coverage. 2. To increase liability on a commercial form from the typical $300,000 to even $2,000,000 is minimal (around $50 per year for the entire contract--regardless of number of units) with most carriers. 3. The generic pollution exclusion found on most personal type contracts is addressed by some commercial policies to consider/cover pollution that emanates from a heating source (i.e. carbon monoxide), thus covering you for risks if a furnace or water heater leaks car-
bon monoxide into a property. 4. On a master (AKA “blanket”) policy, as you grow and add properties, the rate drops proportionately. Personal policies
STRIVING TO REACH YOUR FINANCIAL GOALS TOGETHER
Investing in real estate is a serious decision. Don’t go it alone. • Investment Analysis and Due Diligence Assistance • Accounting Services Different levels of service to match your budget • Clean, organized records means less hassle at tax time • Tax Planning and Compliance
Ellsworth & Associates 513-272-8400
What you’ve always dreamed of, someone else who knows accounting and tax to handle it for you. The Investor
9624 Cincinnati Columbus Road Suite 209 West Chester, OH 45241
9
only insure one property per policy, and so do not get less expensive as properties are added. 5. Related to #4, in the event of a catastrophe, such as a tornado, the deductible in a commercial policy applies once for the occurrence, not per location. If you have multiple losses from a single disaster, you don’t have to pay multiple deductibles with a commercial policy. 6. The deviations to carry higher deductibles are cost-effective under a commercial policy much more so than most personal contracts. In other words, carrying a $2500 deductible on the commercial policy may save 15% of premium versus a $1,000 deductible. On a personal policy, the same change my only generate half the savings…gives some food for thought on consideration of catastrophic deductibles such as a $5000 or more, especially as you add more units. 7. Many insurers limit the number of units they will insure under personal contracts, and as you’ve discovered, will not consider non-personally owned properties for coverage. Since most educated investors hold their properties in LLCs, corporations, and so on, this makes the personal policies impossible to get—and I don’t like the idea of the insurance company limiting my asset protection options in this manner. 8. The “fire and hazard” policy you have may be a named-peril policy only. In other words, the policy will pay out only for the losses specifically named in the policy. A commercial policy can and should be written on an “all-risk” form. “All-risk” simply means that unless a peril is specifically excluded, it is covered. 9. With our commercial policy, you have the ability to add newly acquired properties up to $250,000 automatically for 90 days. You have 90 days to call us and add the location to the policy. I hope that this article has helped you to understand some of the details of the insurance that you need as an investor. Feel free to contact my office at (888) 741-8454 if you have any other questions!
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April 2017
HOW TO BUY (OR WHOLESALE) HUD HOMES BY VENA JONES-COX
Over the course of the last few months, I’ve had tons of questions about HUD homes—probably sparked by the fact that FHA recently announced that they’ll be selling off 9,000 defaulted loans in the fall. HUD homes are bank-repossessed properties that were subject to FHA insured mortgages prior to the foreclosure. The usual process is that the bank that owns the mortgage forecloses on the property, determines that it’s worth less than the 82% of value for which FHA insures the loan, makes a claim on the insurance, and turns the property over the HUD, which then sells it. And there are TONS of HUD foreclosures—FHA loans are the “new subprime”, since they require very low down payments, require much less of the borrower in terms of credit than conventional loans, and are often the loans of choice for first time home buyers in today’s market. Thanks to relatively lax lending standards, recent statistics show that the 5 year default rate on HUD loans exceeds even that of the old subprime mortgage—26% of the mortgages FHA insured in 2007 are delinquent, 24% of those issued in 2008, 11% in 2009, 4.1% in 2010, and 1% for 2011. Among borrowers in the lowest credit score range allowed by FHA—600 to 640, the delinquency rate is 20%. So yes, there are a lot of foreclosures owned by HUD— which is to say the American Taxpayer—and the number will continue to climb. But the HUD home sale process is very different than the normal REO sale process. In some ways it’s easier, in some ways harder. The HUD home bidding process is all done online, at www. HUDHomestore.com. Properties available for sale can be searched by area and by bidder type—most properties have a 15-30 day period wherein they are only available to home owners, so be sure to select the “investor” drop down when searching.
49¢
Trigg Pendleton
sq ft
513.354.4851 TPendleton@McSwainCarpets.com
ceramic
99¢
starting at
sq ft
start ing at
start ing at
49¢
vinyl
Most HUD listings have an entire slew of “attached documents”, which you can view on the site. These include a brief property inspection, which will tell you about some of the mechanical system, and a lead disclosure which will tell you if HUD’s lead paint test came back positive. The bidding process is very simple: your agent logs in, checks the box that says “investor”, selects the financing type (which will generally be “cash” in the case of investors), enters the gross sales price, requested seller concessions (you can ask HUD to pay some closing costs), requested buyer’s agent commission, buyer name and tax ID number (we’ll come back to that), and submits the bid. The bid is considered on a “Net to HUD” basis. So if you offer $50,000 on a property, but you ask for $1,000 in seller concessions, your agent asks for a $1,000 commission, and the listing agent has a $1,000 commission, the offer will appear as a $47,000 “Net to HUD” offer. And it is a bid; once accepted, the agent will be sent an offer package that must be filled out and returned to HUD via snail mail within 48 hours. If the physical offer package is not submitted, the property goes back on the market 2 days later. Bids are processed the next business day with one of 4 results: either the offer will be cancelled (rejected) or it will be accepted, or countered, or the property will be sold to another bidder.
Carpets & Floors
carpet
In order to view or bid on a HUDowned property, you must have an agent who is registered with HUD and has an NAID number. HUD issues special keys to these agents that allow them access to all HUD properties, and an NAID number must be entered in order to present a bid.
sq ft
h a rd w o o d
2
$ 69
starting at
sq ft
• Competitive Pricing • Knowledgeable Sales Team • Superior Customer Service
So the upsides of HUD homes are: 1. Ease of bidding 2. Quick response time 3. Relatively low earnest money requirements ($500 on bids less than $50,000; $1,000 on bids more than $50,000) 4. More disclosures than most REO properties, including a lead disclosure usually backed by an actual lead test
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There are downsides, too: 1. NO post-offer inspection period. Once you’ve submitted the physical offer with the earnest money check, you CAN NOT get out of the contract based on the results of any inspections. This doesn’t mean you can’t DO inspections, just that your obligation to close can’t be dependant upon the results a. On the bright side, your losses are limited to your earnest money. In most bank contracts, the bank leaves open the option of suing you for more than your earnest money. 2. No assignment of the contract 3. If HUD’s chosen title company isn’t doing the closing, HUD must see the closing statement 7 days in advance of the closing. This is not disclosed in the contracts, but it is the case—which may cause you to need an extension if your title agent or attorney does what MOST do and sends the closing statement 24 hours in advance of the closing Tips on Making Offers on HUD Properties: • Do NOT rely on HUDs inspection documents in making a pricing decision. They’re useful: in cases where the wiring has been cut, HUD will often hook a generator to the furnace to see if it works, a step you’d never take. But they are not complete (it’s mechanical systems only), may not be up to date (I’ve seen more than one month-old inspection wherein the plumbing system was reported to be working when it was, by that time, gone), and are sometimes just flat wrong. As always, look at the property before bidding. •
If you plan to wholesale the property, use a trustee name as the bidder name, but enter the EIN number of your LLC as the Tax ID number. I’ve gone round and round with HUD about the “Trusts don’t have EIN numbers, and the trustee should NOT be using his social security number because he’s not the buyer” issue to no avail. However, the assignment of land trust method
•
The old “bid must be within 10% of asking price to be accepted” rule seems to have gone out the window. Prior to the bursting of the real estate bubble, it was
useless to make an offer that netted HUD less than 90% of its asking price. Today, HUD is commonly accepting offers as low as 60% of its asking price (which, by the way, is usually relatively reasonable), and I’ve seen offers of as little as 30% accepted. Still, the closer you can make your “net to HUD” offer to the asking price, the greater your chances that it will be accepted—so don’t ask for the moon in that “seller concessions” box. •
Always have your agent check the “you may hold offer for backup” box. Generally, when I make an offer on a HUD property, it’s rejected or countered at a price higher than what I want to pay. However, when I check the “hold offer for backup” box on the online form, I receive emails when the price drops, when the property comes back on the market following a contract falling through, and so on. A recent property was priced at $28,000; I offered a net to HUD price of $9,250. Within weeks, the price dropped to $18,000, and then to $13,000, at which point I resubmitted my offer at a net to HUD of $10,450. The property then went off the market—theoretically sold to someone else—but then I got an email this morning saying that it was back on the market at $13,000.
HUD properties are, for the moment, worth pursuing. Just make sure you have a complete understanding of the property and the process before making any offer
Benjamin A. Bauer, Attorney at Law 10999 Reed Hartman Hwy., Suite 108A (513) 851-7600 ● ben@thebauerfirm.com -
Wills, Trusts, & Probate ● Real Estate ● Evictions LLCs ● Small Business Law ● Civil Litigation
Sasha Allen 513-449-0514
-
Licensed in Ohio, Kentucky, & Florida -
www.thebauerfirm.com 12
April 2017
HOW TO USE THE FIXED COST METHOD TO DETERMINE THE MAXIMUM ALLOWABLE OFFER BASED ON ARV BY BRANDON TURNER, BIGGERPOCKETS.COM One of the more accurate methods of determining your Maximum Allowable Offer based on a property’s ARV is known as the Fixed Cost Method. The theory behind the Fixed Cost Method is that all the extra charges, such as holding costs, utilities, and closing costs, can be combined to form one number, known as the “fixed costs.” To determine your Maximum Allowable Offer, you simply need to work backward from your ARV, subtracting out your fixed costs, the desired profit, the wholesale fee, and the rehab expenses to arrive at your offer. The formula looks like this: ARV – Fixed Costs – Investor’s Profit – Wholesale Fee – Rehab Costs = Maximum Allowable Offer Of course, to do this calculation, you must understand how to determine your fixed costs. The profit, fee, and rehab expenses are fairly easy to determine, but discovering the fixed costs will take a little explaining. The best explanation for fixed costs can be found in Author J Scott’s book The Book on Flipping Houses (published by BiggerPockets Publishing), which states, “Fixed costs are comprised of the various fees, commissions, and costs associated with all parts of the investment project (outside of the actual rehab costs).” TYPICAL FIXED COSTS The author goes on to break out these expenses into more specific detail, adding up the total of the most typical fixed costs for his business: • Inspection Costs: $400 • Lender Fees: $1,000 • Closing Costs: $2,000 • Mortgage Payments: $2,500 • Property Taxes: $600 • Utilities: $1,000 • Insurance: $200 • Commissions: $4,000 • Selling Closing Costs: $4,000 • Home Warranty: $500 • Termite Letter: $100 • MLS Fees: $100
These costs, all added together, give an investor the fixed costs for a property. Keep in mind, these are just the rates that J Scott outlined in his book and that he has seen applied to his business—but they may not be the same for you. Every market is different, so spending some time determining what your costs would be on the listed items is important. For example, if you plan to sell to a landlord, you won’t need to worry about the sales commissions, selling closing costs, home warranty, or MLS fees, because the landlord will be holding on to the property. However, if you sell to a house flipper, you would need to include these figures, because the flipper will be selling and will need to account for these numbers. So to determine your fixed costs, create a spreadsheet with the listed items and spend some time researching what these figures would typically be for your area. You don’t have to get them all perfect, but estimate conservatively. The nice thing is, after you do this once, you won’t need to do it again for the same kind of property, as long as that property is in the same area. This is why we call them “fixed costs”—because we’ll use the same (fixed) number every time. For J Scott, that number was $16,400. What will yours be? Take an hour to figure it out once, and you won’t need to do it again for that same property type and area. AN EXAMPLE Let’s use the example of wholesaler Beth and the deal she’s wholesaling at 123 Main Street house. We’ll look at an example of how she used the Fixed Cost Method to determine her Maximum Allowable Offer. Earlier we determined that
The Investor
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the home’s ARV was an estimated $147,333. We also calculated, when discussing the 70% Rule, that the rehab costs would be approximately $20,000. This time, we’ll use the Fixed Cost Method to come up with the Maximum Allowable Offer: • Beth determines that the fixed costs would total $19,000. • The house flipper (Jackson) that Beth is planning to sell the home to likes to make $20,000 minimum on any project, so we’ll use that number for the desired profit. • Beth is aiming for a $10,000 wholesale fee. • Beth estimates the rehab will cost approximately $20,000 and gets a local contractor to agree. Therefore, $147,333 (ARV) – $19,000 (Fixed Costs) – $20,000 (Profit)
– $10,000 (Wholesale Fee) – $20,000 (Rehab Costs) = $78,333 Maximum Allowable Offer Beth has determined that the most she could pay for this property is $78,333 using the Fixed Cost Method. [This article is an excerpt from Brandon Turner’s The Book on Investing in Real Estate With No (or Low) Money Down.] Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, thirdperson speaker, husband, and author of “The Book on Investing in Real Estate with No (and Low) Money Down”, and “The Book on Rental Property Investing” which you should probably read if you want to do more deals.
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Join us from 6 pm - 9 pm at the Ramada Plaza 11320 Chester Road, 45246
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April 2017
Vendor Members Directory - 3/28/2017 Business
Company
Contact Info
Business
Company
Contact Info
Accounting
Chuck Vonderhaar, CPA
Chuck Vonderhaar 513-563-0598 chuck@cpvcpa.com
Inspection Services
Criterium – Cincinnati Engineers
Mathew Klein 513-474-9600 criterium-cincinnati@fuse.net
Accounting
Ellsworth & Associates, CPA’s
Scott & Deanna Ellsworth 513-272-8400
Insurance
Stepping Stones
Paul Olzeski 513-520-0939 paul@steppingstones.rocks
Butler County Edge-Co
Brent Fening 513-868-2068 edgcobp@yahoo.com
Preservtion & Contracting
Serious Property Management
Pease Warehouse
Stephen Pease 513-867-9926 Stevep@peasewarehouse.com
Property Mgmt
Berkshire Hathaway HS Commercial Division
Mike Smith 513-328-3486 seriouspropertymanagement@g mail.com
www.cpvpa.com
www.ellsworthcpa.com
Building Supplies Building Supplies
Building Supplies
www.edgcowholesale.com
www.peasewarehouse.com
Surplus Warehouse www.surplus-warehouse.com
sellsworth@ellsworthcpa.com
www.criterium-cincinnati.com
www.firstcirclepm.com
Brent McCleneer 513-245-2222
swcincinnaticlrn@ecbarton.com
Rehab & Restoration Rehab Project Mgmt
Cincinnati Home Improvement Co., LLC
www.cincyhomeimprov.co
Max Arroyo 513-772-5736 marroyo@bhhspro.com Christopher Penn 513-898-1878 cincinnatihomeimprovement@g mail.com
Cleaning Products
OdorXit
www.OdorXit.com
Deb Meyer 513-266-4008 deb@odorxit.com
Cleaning and Haul Outs
Swept Away Property Cleanouts
Sasha Allen 513-344-3972 TeamAllen@fuse.net
Restoration
Contractor Services
BKH Contracting
Keith Hardig 513-266-8719 keith@bkhcontracting.com
Real Estate Services
Exterminator
Formula Exterminators
Fred & Cindi Goff 513-671-7378 cindi.goff@gmail.com
Real Estate Services
LD and SL Properties
Steve Hering 513-253-2644 wtevehering@prodigy.net
Financial Services
Badcat Properties, LLC www.badcatproperties
Sam Moore, Jr. 513-485-8599 moorejrsam@hotmail.com
Real Estate Services
CORE Group
Jiries Dawaher 513-504-5565 jtd8.re@gmail.com
Financial Services
Dayton Capital Partners
Darrin Carey 937-458-3303
www.DaytonCapitalPartners.com
Darrin@DaytonCapitalPartners.co m
Real Estate Services
Exit Best Realty
Marty Russell 513-545-1637 martysrussell@gmail.com
Financial Services
The North Coast Commercial Group
James Markowitz 216-310-4667 james@nccgfinancing.com
Real Estate Brokerage
Federle Inc., Realtors
Sasha Allen 513-449-0513 teamallenrealtors@fuse.net
Secured Investment Lending
Brittany Kiah 407-878-2830 Brittany@securedinvestment lending.com Dave Woodcamp 513-761-6688 springvalleybank@cinci.rr.co m David Caldwell 513-453-4006
Real Estate Services
Outside The Box Real Estate
Christina Carey 513-509-2705 Christina@OTBrealestate.com
Real Estate Services
Exit My Foreclosure
Kristin Caledine 513-509-9814 Kristin@ExitMyForeclosure.com
Security
ADT Security Services
Kristen McClanahan 513-497-7990 kmcclanahan@adt.com
Title
Servicelink
John Wagoner 513-857-9179 John.wagoner@svclnk.com
Title
Parkway Title, LLC
John Wagner 513-857-9179 John.wagner@svclnk.com
Financial Services Financial Services Floor (wood) Restoration System Floor Restoration
securedinvestmentlending.com
Spring Valley Bank
www.springvalleybank.com
Fabulous Floors of Cincinnati
www.fabulousfloorsusa.com
davidcaldwell@ fabulousfloorsusa.com
Olmec Reflections, INC.
Donald Boling 513-300-9203
www.olmeccarpetcleaninginc.com
Flooring
McSwain Pro Floors
Legal
The Bauer Firm, LLC
www.mcswaincarpets.com
www.thebauerfirm.com
OlmecReflectionsinc@gmail.com
Jon O'Connor 513-354-4400 joconnor@mcswaincarpets.c om Ben Bauer 513-851-7600 ben@thebauerfirm.com
Wholesale Properties
The Investor
BildWise
Dan Poske 513-301-0247 dposke@cmsllc.com
Icon Environmental
Jeremy Clayton 513-396-6653
www.BildWise.com
www.IconPropertyRescue.com
ERA Real Estate Services
www.realsolutionsrentals.c om
www.coregroupre.com
www.bestexit.com
www.federleinc.com
www.OTBrealestate.com
www.ExitMyForeclosure.com
www.svclnk.com
www.parkwaytitlellc.com
You Buy Houses www.youbuyhouses.com
clayton@IconEnvironmental.net
Jennifer Day 513-276-2996 jenniferday@era.com
Drew White 513-471-0141 DrewWhitePix@gmail.com
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