THE INVESTOR HOW TO INCREASE YOUR WEALTH June 2 Early Meeting EXPONENTIALLY WITH APARTMENTS/ Fair Housing Presented by Deb Jetter with Housing MULTI-FAMILY PROPERTIES Opportunities Made Equal (HOME) Presented By Anthony Chara
On April 4, 2016, the U.S. Department of Housing and Urban Development (HUD) issued new guidance stating that blanket bans on applicants with criminal histories would likely violate the Fair Housing Act. So what are these new requirements and how do they impact landlords’ screening and selection policies for getting the best tenant in rental properties?
Why buy 1 when you can buy 10 or 20 or even 50??? • Find It (Where can you find good properties?) • Figure It (Analyzing the numbers to make sure it’s the right property) • Fund It (If the numbers make sense, funding is easy!) • Finish It (Hold the property for longterm cash flow or sell it for a quick return) Now with more than 1600 apartment units and counting, and a total asset value well in excess of $42 million, Anthony has the experience to teach you how to buy both small and large apartment complexes to increase your wealth substantially.
Nationally recognized real estate investor and speaker Anthony Chara will share his secrets on this niche market and how to be successful within it. Join REIA of Greater Cincinnati (REIAGC) for the main meeting on Thursday, June 2, 2016, for this important meeting.
Join Deb Jetter from Housing Opportunities Made Equal (HOME) at the early meeting on Thursday, June 2, 2016, beginning at 6:00 pm and learn about HUD’s new guidance that details this agency’s interpretation of how fair housing law apply to policies that exclude people with criminal records.
And be sure to join us for Anthony’s full day seminar on Saturday, June 4 from 9 am to 5 pm. Register online at www. cincinnatireia.com.
MULTIFAMILY INVESTING SEMINAR ON JUNE 4
Are you involved in buying or selling apartment buildings or do you want to know how to launch into this niche market? Do you have clients interested in multifamily investing who would benefit from more education? Join us for an all-day seminar with Anthony Chara on Saturday, June 4 from 9 am to 5 pm at the Four Points by Sherton. See inside for details. 10945 Reed Hartman Hwy | Ste. 113 Cincinnati, OH 45242 P: 513 407-3137 www.cincinnatireia.com
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2016 BOARD OF DIRECTORS & COMMITTEE CHAIRS
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President Anita Johnson 513 334-0444 Secretary Jim Shapiro 513 515-6717 Board Members Eric Kottner Narendra Mundhe Cheryl Long Linda Hull Tom Terlau Drew White Vendor Coordinator Karen Wessel 513 371-6953 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.
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WHOLESALING SUBGROUP
7:00 pm | Perkins 7108 Hamilton Avenue North College Hill Michelle Clayton - 513 400-4937
GENERAL MEETING
6 pm - Fair Housing 7:30 pm - How To Increase Your Wealth Exponentially With Apartments Crowne Plaza Blue Ash
FRIDAY MORNING MEETUP 9 am to 11 am Linda Hull - 513 549-7821 Cheryl Long - 513 429-2583
MULTIFAMILY INVESTING WITH ANTHONY CHARA
9 am to 5 pm Four Points by Sheraton 7500 Tyler’s Blvd, West Chester www.cincinnatireia.com
WEST SIDE SUBGROUP
6:30 pm Thai Taste 5120 Crookshank Road, 45238 Drew White - 513 207-9846
INVESTORS LUNCH
11:30 am - 1 pm Century Inn Restaurant 10675 Springfield Pike Dave Jasper - 513 942-5110 or Max Arroyo 513-772-5736
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GENERAL MEETING
6 pm - Buying Without Banks 7:30 pm - Multi-Unit Mastery Embassy Suites Blue Ash 4554 Lake Forest Drive
FREE WORKSHOP: HOW TO MAKE MONEY IN TODAY’S REAL ESTATE MARKET 8:30 am to 12 pm CMC Properties - Blue Ash 10945 Reed Hartman Highway
LANDLORD SUBGROUP
6:30 pm Crosley’s Sports Cafe 4901 Vine Street, Cincinnati Mary Brickler, 513 557-8632
FORECLOSURE NOTE BUYING SHORT SALE SUBGROUP 6:30 pm, Wendy’s Restaurant 5909 Mulhauser Road Deb Meyer - 513 266-4008 or John Dohtery - 859-653-3290
DEALMAKER FORUM 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
MISSION STATEMENT
OF THE REAL ESTATE INVESTORS ASSOCIATION OF GREATER CINCINNATI (REIAGC) • Encourage our members’ success through education and professional services • Represent REIA 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 As I reflect on my now 12+ years in the real estate business, the one thing that continues to be a recurring theme is education. I started without knowledge of the benefits of a local real estate association simply because I didn’t even know there was such a thing. And we all know that getting the right education and training for any profession is a critical aspect of being successful in that profession. Nearly every year since I’ve been involved with our real estate association, I’ve heard comments like “Why do we have all these sales pitches? I paid my dues—I don’t want to get sold on ANOTHER $99 all-day seminar or ANOTHER $1,000 home study course.” We hear you. But there are some things you might want to consider before you pooh-pooh the additional education that’s offered to you at REIAGC. For instance: 1. You WILL get an education by being in this business. Period. And you will get your education either by creating your own path and making your own mistakes OR by learning from those that are successful and can teach you how to not make the same mistakes they did. Yes, when I started out I knew I would need some education. But when you “don’t know what you don’t know” you can end up spending too much time (and money) focusing on things that should not be the focus for where you are in your journey. 2. The nature of real estate education is that we get our general information from our local associations and subgroups, but our specific, in-depth information on a given topic comes from experts who’ve “been there, done that”—and bothered to write it down into a stepby-step system. For instance, let’s say you’ve decided that wholesaling is the right strategy for you right now. If REIAGC committed all of our regular “main meetings” to that topic for an entire year, you’d get ~30 hours of education—less than the typical wholesaling boot camp, and spread over the course of an entire year. Plus, the poor members who wanted to know how to be a successful landlord, or note buyer, or rehabber, would be left out in the cold. If you want a complete education on ANY specific topic, you’re going to get it the same way I did, and that
every other successful practitioner of that strategy did— by spending additional time and money to get in-depth, focused information in a short period of time. Unless, of course, you want REIAGC to meet every weeknight of the year, in which case I’d personally like to invite you to take on that project. 3. “Selling Speakers” are necessary to our in-depth education, and they’re a dime a dozen, but good ones are rare, and REIAGC makes sure you get the good ones. REIAGC only brings in national speakers to our main meetings 4 times a year (vs. monthly, as some other REIAs around the country do), and these speakers are carefully chosen based on the quality of their presentations and products and on their actual knowledge and experience, NOT on how much product they can sell in 90 minutes. Sure, gurus that you cross paths with on the internet have better sales pitches, more over-the-top promises (software that will run your business for you while you sleep), and slicker packaging—but when you get your “continuing ed” through REIAGC’s speakers, you know you’re getting the good stuff. 4. Plus, come on—they’re fun and informative. Even if you don’t choose to invest in a selling speaker’s course, you know that their presentations are funny, well organized, and motivating. Plus, they drop tons of valuable tidbits that you can use right away. Last year alone, I walked away from the handful of meetings with selling speakers with pages and pages of notes on how to improve my business. Yes, there’s a sales pitch at the end and yes, you’re supposed to politely sit through it even though you may not be interested in spending any money on their course or workshop or boot camp. So you can choose to be annoyed—or you can choose to be educated, amused, and thankful that we work so hard to bring the best of the best of the “gurus” to your back yard, with the sole goal of helping you succeed in your chosen business.
Anita Johnson NOTE: JUNE 16 GENERAL MEETING ONLY WILL BE HELD AT THE EMBASSY SUITES IN BLUE ASH. ADDRESS IS 4554 LAKE FOREST DRIVE. THIS IS FOR THE JUNE 16 GENERAL MEETING ONLY!
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INVESTORS LUNCH GROUP On June 14th we will have a contractor come in and discuss how they handle rental properties in the Cincinnati area. Kevin Gilles, founder of 25th Hour, will be there to answer your questions and provide tips on maintaining your investment properties. 25th Hour specializes in maintenance and repairs for residential, commercial, and retail clients. 25th Hour is challenging the way maintenance and repairs are done in new ways that streamline the entire process while reducing the overall costs. Kevin Gilles has lived in Cincinnati for over 40 years and resides in Amberley Village with his wife Sarah and five children. Kevin attended Moeller High School and graduated from Wittenburg University. Bring your questions! Location: Century Inn Restaurant, 10675 Springfield Pike, Cincinnati, OH 45215. Phone: (513) 771-4816. Time: 11:30AM – 1:00PM If you have any questions, feel free to call Co-Chair Max Arroyo (513) 772-5736.
LANDLORD SUBGROUP: TURNING APARTMENTS QUICKLY With Joe Brickler
Do you know that for many Landlords, one of the biggest reasons they don’t get all of their rents every month is because they have apartments sitting empty — you know, the old tenants have moved out and the new ones haven’t moved in yet? Why? Because it isn’t ready for those new tenants. But, what if I told you that you can improve the efficiency of your apartment turns by knowing a few time savers and tricks? Join us on June 21st and hear Joe Brickler speak about some tricks you need to know to get your properties turned quickly and efficiently. The Landlord subgroup meets at Crosleys Sports Café, 4901 Vine St. in St. Bernard. The presentation begins at 7:00 but plan on getting there at 6:30 to order food, network with other Landlords and make valuable new connections. HOPE TO SEE YOU THERE
PHOTOELECTRIC SMOKE DETECTORS - REQUIRED IN CINCINNATI AND RECOMMENDED EVERYWHERE BY JIM SHAPIRO, PROPERTY MANAGER AND GENERAL CONTRACTOR Did you know that there are two different types of smoke detectors? Did you know that, in 2013, the Cincinnati City Council passed a law that requires installation of Photoelectric Smoke Detectors in all rental properties? This law was intended to speed the deployment of photoelectric smoke detectors which perform better in a smoky fire or a smoldering fire that has not yet burst into major flames. The smoke is often the most dangerous hazard and most likely to result in death. This is an update and a reminder for our members, giving you the basics and a reminder about this safety topic.
These two victims both died from the poisons they breathed in – even the rapid response and expert medical treatment was unable to save them. The fire never really got near them. They were found passed out on the floor of their 3rd floor rooms. According to the fire department, the poisons in smoke can render a person unconscious in just a few moments. They could not make it out the door and down one
Some background -- On New Year’s Day 2013, a fire believed started by a space heater too close to bedding killed two tenants at a nice brick house in Clifton, 3 blocks from campus. This house was well cared for, had smoke detectors, and the fire was confined to a single room. News reports and the Fire Department report said a 911 call came in at 6:48AM, trucks were in the scene in under 3.5 minutes, and they had the fire under control minutes after the 911 call came in. The firemen carried the two victims from the house 9 minutes and 50 seconds after the call first came in.
JUNE WHOLESALE SUBGROUP: TRACKING YOUR BUSINESS Every successful business owner KNOWS THEIR NUMBERS. • What’s your most effective marketing? • How many calls until you get a deal? • How much profit is your average deal? • How do you know? • Why does it matter?
Max J. Arroyo, Jr. Vice President Investment Property Asset Manager
Come to the Wholesale Subgroup June 1st to learn what KPI’s & KFI’s make the most sense for your wholesale business. Have questions? Call Cheryl 513-254-3558
Berkshire Hathaway Profesional Realty Commercial Services
7311 Tyler’s Corner Place West Chester, OH 45069 Direct: 513-772-5736 Leasing and Service: 1-888-288-5912 E-Mail: Marroyo@bhhspro.com www.firstcirclepm.com
Wednesday, June 1 6:30 Networking, 7pm Topic Perkins--North College Hill 7108 Hamilton Ave Cincinnati, OH 45231 4
June 2016
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electric detectors are less prone to false alarm (caused by cooking or even steam); they respond more quickly to a smoking smoldering fire; and they are almost the same in responding to a flaming type of fire.
flight of stairs to safety – even getting pulled out in less than 10 minutes was already too late. This brings us to Photoelectric Smoke Detectors that Cincinnati law requires landlords to install. Their benefit is they will go off much sooner in a smoky fire, giving occupants a better chance of survival. There are two types of Smoke Detectors – Ionization and Photoelectric. Ionization has been the most common type – estimated to be 90% of what was in use in 2013 and still the most common and least expensive. Ionization detectors use a small amount of radiation to maintain an electric flow between two electrodes. When tiny invisible particles of combustion caused by flame disturb the electric flow within the detector, the alarm goes off. Photoelectric Detectors work differently – they pass light through a chamber. When smoke particles enter the chamber, they impact the light beam and trigger a sensor that sets off the detector. It’s similar to what happens when you walk through the beam of light entering a store and a doorbell rings. Interestingly, compared to ionization detectors, the photo-
Dean Dennis from “Fathers for Fire Safety”, (http://www.theworldfiresafetyfoundation.org/fffs.html) states that a number of formal and informal tests, many available to watch on YouTube, show that in smoky fires, an Ionization type detector can take twice as long and as much as 40 minutes or more to be set off by just smoke – and in that amount of time, the smoke can already be deadly. An NBC news story said a test showed a burning couch took 17 minutes to set off the Photoelectric detectors and 38 minutes for the Ionization detectors in the same room. In another test in Barre City, Vermont, a burning couch set off a Photoelectric detector after 11 minutes, when there was still a high oxygen content and good visibility to navigate the room. That same test found the Ionization detector did not go off for more than 60 minutes, during which time the oxygen level had dropped to the point that you would be dizzy and even pass out and smoke had created zero visibility. During that time, much higher levels of toxic chemicals would have been released and the condition would become more poisonous. The dif-
ference between 11 minutes and 60+ could be a life or death. The NBC News report asked why we are not seeing a quicker transition to these more responsive detectors and the response suggested that it’s a business decision. Evidently the ionization detectors are cheaper to make and the manufacturers have been slow to drive the transition. The Cincinnati law requires placement of at least one Photoelectric Smoke Detector in the hallway outside contiguous bedrooms and one in or near other bedrooms. Obviously, putting in additional detectors is OK – and not required by the law. Over time I’d say it’s likely we will see a transition to these better performing devices. The photoelectric detectors are more expensive – roughly averaging $10 per detector (the price has come down a little) and still more than the price of Ionization detectors. So, a property owner buying these will face a small additional cost. REIAGC is encouraging all rental property owners to make a plan and budget for getting these deployed. Note that there are actually “Dual Sensor” detectors with Photoelectric and Ionization both built in. Unfortunately, there are no standards for Dual Sensor models and test results show that in order to make them work about the same, the manufacturer have “dumbed down” the photoelectric sensor so they are not as effective. Most independent test
results suggest these are NOT WORTH USING. In fact, the Cincinnati legislation specifically says dual sensor models will not satisfy the city’s requirement – it must be a dedicated photo electric detector. City of Cincinnati Fire Department officials are still recommending Ionization type detectors with HUSH BUTTONS be used in kitchens where flaring flaming fires are more common. Dean Dennis thinks that the response from just using photoelectric detectors is excellent and his organization recommends making a total transition to these in order to provide the best safety protection for our tenants and our families. I encourage REIAGC members to install Photoelectric detectors both to follow the law and to protect our tenants. I hope to never get a call telling me that a tenant died in a fire in a home I own or manage – and if spending an extra $25 to have 5 photoelectric detectors in addition to the common ionization models can help me avoid the nightmare of getting that call (and the legal implications that go along with it) then it’s worth it. If I do get that call, I’d like to be able to say “I installed photoelectric detectors to protect my tenants.” I take the attitude that if we can afford to buy rental homes, we can afford a few extra dollars to make them safer and to protect our own interests. Let’s hope none of us ever get that call....
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LEGISLATION MATTERS: OHIO CITIES’ “POINT OF SALE” HOME INSPECTIONS UNCONSTITUTIONAL OREIA and 1851 Center for Constitutional Law move to protect Ohioans’ property rights from unlawful searches and fees statewide After months of effort and laying groundwork, one of OREIA’s major goals for 2016--ending unconstitutional inspections for all Ohioans--is one step closer to being achieved. In partnership with the Ohio Real Estate Investors Association (“OREIA”), the Finney Law Firm in Cincinnati, and the law firm of Berns, Ockner & Greenberger in Cleveland, the 1851 Center for Constitutional Law today moved in federal court to immediately enjoin Ohio cities, and the Cities of Bedford and Oakwood in particular, from enforcing “point of sale” and “presale” programs that require citizens to endure and pass arbitrary and warrantless government inspections before they can sell their homes to even the most informed and willing buyers. Such municipal ordinances, in addition to restricting Ohioans’ property rights, subject homeowners to open-ended warrantless searches of every interior and exterior space of a home, violating the Fourth Amendment to the United States Constitution and Section 14, Article I of the Ohio Con-
stitution. The legal action against Bedford is filed on behalf of area landlord Ken Pund, who is forbidden from selling to his daughter a home that he owns and she already resides in, and John Diezic, who was prohibited from selling his Bedford home due to minor cracks in the asphalt of his driveway. In Oakwood, Plaintiff Jason Thompson was forced to pay for and undergo an inspection simply after making an alteration to the title of his property. In each case, the City threatened to criminally prosecute and even imprison these homeowners if they sold their homes without first submitting to and passing city inspections. Both the United States and Ohio Supreme Court have invalidated warrantless inspections of houses, absent consent or an emergency. Nevertheless, Ohio cities have vigorously sought to collect inspection fees and impose fines, and the point of sale inspection requirements are the lynchpin to this revenue stream - - homeowners, irrespective of whether they want or need the inspection, pay a $100 fee to fund the inspections, and then additional fees for “follow-up” inspections.
The lawsuit seeks to restore both Ohio homeowners’ and small business owners’ freedom from warrantless searches without probable cause. In doing so, the 1851 Center’s Complaint explains the following: • Government inspection of homes, even when for sale, requires a warrant, and these expansive warrantless searches, as “unreasonable searches” of “houses,” violate Ohioans’ Fourth Amendment rights. • The Warrant Requirement is a significant protection for property owners, because a warrant can only be issued in light of serious and credible complaints about the property. • Fees that are charged to fund these unconstitutional inspections are also unconstitutional; cities cannot require their payment, and must return past payments. • In a prior 1851 Center victory, Baker v. Portsmouth, federal courts declared warrantless inspections of rental homes unconstitutional. The Fourth Amendment’s protections should extend to inspections triggered by the marketing or sale of a home, just as they apply to inspections triggered by renting a home. “Local government agents do not have unlimited authority to force entry into Ohioans’ homes or businesses. To the contrary ‘houses’ are one of the types of property specifically
mentioned by the Fourth Amendment; and Ohioans have a moral and constitutional right to exclude others, even government agents, from their property. Entry requires either a warrant or an emergency, and neither is present with respect to these suspicionless inspections,” said Maurice Thompson, Executive Director of the 1851 Center. “The right to own property in Ohio has little value if local governments can continuously chip away at one’s right to actually make use of that property, requiring government permission slips for basic arrangements such as the sale of one’s home to a willing buyer.” In Bedford, the City maintains the power to block sales on account of “architectural style and detail,” “color,” and lack of “orderly appearance.” In Oakwood, the City concedes “the inspection will seldom, if ever, reveal latent defects or violations of the Property Maintenance Code which are not readily apparent. Neither should owners nor prospective owners or occupants rely entirely upon our inspection regarding the house or accessory structures or fixtures.” As a member of REIAGC, part of your dues go to support the important work that OREIA and its partners like the 1851 Center do to support your property rights in Columbus and in the courts. We’ll keep you up to date on these issues as they progress, and we thank you for your membership and support.
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HOW DO YOU FIND GREAT DEALS ON APARTMENTS? BY ANTHONY CHARA, APARTMENT MENTORS, LLC I get this question a lot, especially, during or just after a presentation showing an apartment complex illustrating a ‘cash on cash’ return in excess of 20%. If you went to a commercial broker and told them you were looking for properties with a 20% COCR, they’d do one of two things; 1-They’d tell you they would buy the property themselves if they ever found one with a 20% COCR or 2-They’d hang up on you because they’d think your expectations are unrealistic. You probably won’t find an Apartment complex advertised with a 20% COCR. Just like the broker said, if it fell into their lap, they’d buy it. However, you can increase your chances of finding some great deals by doing a few things differently. First off, there’s no big secret in ‘finding’ Apartment complexes for sale. Start by using the same vehicles most investors use. For instance, you can search through Loopnet.com or go to any of the major or regional Commercial Brokerage web sites such as Marcus & Millichap (MarcusMillichap. com), CB Richard Ellis (CBRE.com) or Sperry Van Ness (SVN.com) just to name a few. There are many many more out there. You can also peruse local newspapers in the market you’re interested in. Remember that not all papers are created equal. Some newspapers will advertise commercial properties in the business section, not the classifieds. Another paper no one thinks about is the Wall Street Journal. They have both national and local properties advertised for sale. Another way to find Apartments for sale is to ask Property Managers or Commercial Financiers that work in the area you’re looking to purchase in. Often times, they know owners who are looking for another property and have to sell their first one to move on or they know someone who’s just
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ready to retire. These are just a few of the sources I use. More are given in my workshops and boot camps. The key to getting great Apartment deals may start with the information above, but it ends with the information below. Like I stated already, there’s no big secret in finding Apartment complexes for sale. The key is to find a great deal and here’s how I do it. The first thing I decide upon is a market in which I want to purchase. I may determine the market based on economic factors such as job growth or an expanding economy in that area. I may decide upon the market just because it’s a place I’d like to visit on a regular basis. The next step is to interview at least 3-4 good commercial brokers in that market and create a long-lasting, mutually beneficial relationship with at least one or two of them. Here’s what I do and how I use my research. Preferably, I want to find a commercial broker that has a CCIM designation. CCIM stands for Certified Commercial Investment Member. Most CCIM’s will list this designation in their internet and newspaper ads. CCIM’s have gone thru extensive training on commercial property, plus, they must have a proven track record of closed deals or consultations showing extensive commercial knowledge and they must pass a comprehensive examination. I consider a CCIM equivalent to a PHD. By the way, you can also find CCIM’s at www.CCIM.com too. It’s estimated that only 6% of the roughly 125,000 commercial brokers out there have a CCIM designation.
them about the market conditions, recent sales in the area and their own experience as a commercial broker. It’s amazing how much information you can get when you ask the right questions. You also get a pretty good feel for the person about whether or not you see yourself having a long-term relationship with them. Once I have a good feel for 3-4 of the agents I’ve spoken with, I give them the criteria I’m searching for in a complex. My criteria will include number of units, unit mix, minimum Cap Rate, price range, the quality of the complex (A, B or C) and area of the city. I may even mention that I’m looking for the owner to do some or all of the financing. I follow-up my phone conversations by emailing or faxing my contact information and criteria to the brokers. Then, I phone or email the brokers every 1-2 weeks to stay in contact with them. Since the brokers know exactly what I’m looking for it makes it easier for them to find something that fits my criteria. The ones that bring me deals I take care of. Obviously, they get their commission, but it’s the extra little things I do that I believe makes a difference such as sending them a restaurant gift card to take their spouse or significant other out for a night on the town at my expense or maybe tickets to a local sporting event or bottle of wine. That way, I am always in the front of their mind anytime a good deal comes across their desk. You’ve probably heard the term ‘Pocket Listing’. Well, I want to be a ‘Pocket Client’. When the broker gets a new listing, I want to be one of the few clients they call first, sometimes
before they even release the details to other brokers in their own office. And that’s the key to finding great deals. If you think about it, everyone out there has access to the same sources for deals, but it’s the people who have nurtured and cultivated their relationship with the broker that reaps the bumper crop! They will even tend to go to bat for you with the seller if you’re looking to do something other than just put down a traditional 20%-25%. They will be in your corner helping you explain to the seller why it would be better financially for them to carry-back some or the entire purchase price then to just sell the property outright and make you bring in new financing. Even in the commercial world, it’s about relationships. Once you have those relationships established you have a much greater chance at turning an average deal into a great deal. A 10% COC return into a 20% COC return. That relationship just helped you double your cash flow. How much is that worth to you? Join Anthony on June 2 at the REIAGC General Membership Meeting for a 90 minute session on successful apartment buying and then register for his 8 hour Saturday session on June 4, 2016. This session will be held at the Four Points by Sheraton in West Chester. Contact the REIAGC office at 513-407-3137 for more information or register online at www.CincinnatREIA.com.
Once I find 5-6 brokers in a given market, with or without the CCIM designation, I call them to introduce myself. I ask
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WHEN AND WHY I USE SPECIALIST - HVAC, ELECTRIC, PLUMBING GARAGE DOOR AND ROOFING BY JIM SHAPIRO, PROPERTY MANAGER AND GENERAL CONTRACTOR Having worked on hundreds of properties, I’ve learned that cheapest is not best – especially when it comes to specialized skills on expensive jobs that should last a long long time. I manage properties for many different owners and investors and I often see cases where contractors convince owners they can do things they really are not qualified to do. These cases often result in major unnecessary expenses for those owners.
up front and ended up spending lots more fixing problems later. When the thing you are installing is supposed to last 20 to 30 years or longer, it pays to make sure it’s done right. When problems surface later, you have headaches and expenses fixing the problem, angry tenants or buyers, other ancillary damages (leaking roofs results in damaged walls, carpets, and tenant property). I suggest that the less you know, the more you should depend on specialists.
Many general contractors will tell you they can do anything – the question is can they do it right! Put another way, would you use your Family Doctor to do Brain Surgery on your child? Some specialties (Plumbing, Electric, and Heating, Venting and Air Conditioning (HVAC) and Extermination) require licenses that tell us those folks are trained and certified to know what they are doing. Some other jobs I use specialists for are Roofing and Garage Door. I’m not saying some General Contractors cannot do some specialty work. They question you should ask is “Do I know enough to know if he’s doing it right?”
THE ROOF -- A modern roof should last 25+ years if properly installed. An investor I know put a roof on a house in Hyde Park. Within 2 years, it was leaking and when I had it inspected 5 years after it was installed, my roofer came and told me about all sorts of problems. He said this roof was doing poorly and to fix it would require replacing it. I called the prior owner to get the original roofer’s name and he said “oh – that guy used to come thought town occasionally but hasn’t been around in a few years”.
In almost all the examples below, the experienced investor who paid for the shoddy work did not save much if anything
They removed a Cedar Shake roof so they had to resheet the roof with plywood before installing dimensional shingles. That’s standard. This roofer didn’t bother to sheet to the valleys – he left sloppy ragged edges – basically skimped
on couple hours of cutting plywood to fit right. That means the metal valleys where slopes meet are not securely nailed to wood – just suspended in the air in places. They didn’t bother to cut the edges of the shingles overlapping into the valley – so instead of the valley letting leaves and water slide down to the bottom they block it and catch leaves creating a backup. That led to water going up under the shingles -where there was no wood – and right into the bedroom ceiling. Cutting those shingle edges would have taken an extra 30 seconds per shingle. He didn’t put down tar paper so all the places he made mistakes mean that all that new decking he installed is not protected. That’s important because he only used 3 nails per shingle (should be minimum 4) and his rows are all crooked and some nails are not going into wood and shingles are coming loose all over. With no tar paper and loose shingles, water is getting to the wood and causing leaks into every room on the second floor. They didn’t put in a starter row at the bottom so water is getting between the shingles to the wood and will damage the wood and eventually the soffits below. The owner has a 5 year old dimensional shingle roof that my roofer said is ready to be replaced and is likely to be a constant maintenance problem causing other expensive damages until that is eventually done. So much is wrong that my roofer did not think he could “fix” it. My roofer goes on roofs for me all the time and calls me
with a list of what was done wrong. I know lots of general contractor says they can do roofing. The questions you should wonder are – how many roofs a year do they do? How about the crew – do they know roofing too – they are going to do most of the work? One ranch house I manage has a simple rectangular roof – and whoever installed it did not know that the shingle above has to cover the nails on the shingle below. There are hundreds of exposed nails – and leaks – on this really simple roof. I see people do dormers and chimneys and valleys wrong all the time and as a result, the owner’s investment is wasted. Done right a roof will last a very long time Garage Door is another job I like using a specialist. When done right, it will last for 30 or 40 + years. Done wrong, I end up with service calls for rails and springs within 2 years – and those springs can be dangerous!!! I have one client who had a handyman install the opener on her garage. Her garage had a low interior height so to make room for the opener, they notched her roof rafters. Now when the door goes up and down, the rafters buckle up and down in the middle. A specialist will know what to do when faced with a tricky situation. I want the guy who installs my garage doors to do garage doors all the time. I don’t want my generalist who has done two in the last 10 years and who says “I can do that for you.” My installer provides better quality openers with more extras (remotes and keypad) for about the same price I can buy a lesser grade opener at Home Depot and
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
June 2016
& Associates
513-272-8400
What you’ve always dreamed of, someone else who knows accounting and tax to handle it for you. 12
Ellsworth
The Investor
9624 Cincinnati Columbus Road Suite 209 West Chester, OH 45241
13
then have to buy the extras. Plumbing and electric speak for themselves. Those are specialties with thick codes books that change annually. I’m not saying I don’t do plumbing with my crew, especially repair and replacement work. Yet, when I’m replumbing a house from scratch or making major changes, I want a professional plumber. Ditto for electric. For resale, being able to show that work was done by a professional “with permits and inspections” gives a buyer confidence in your product. And it gives you confidence too. I can give you a list of messed up furnace installs. A few weeks ago an owner asked me to use a furnace he had from another house that was installed and removed and never actually used. When my HVAC guy went to install it, he found that it had been incorrectly installed the first time. The inducer motor was flooded, the exhaust pipes were cracked, the mother-board had been damaged. I was told this furnace never actually ran – and whoever did what they did made it an expensive paperweight. Another house had a 3 year old high efficiency furnace installed by an “I can do it all” guy in a house rehabbed for resale. He installed the wrong type of furnace – the cold air return is on the bottom, not the side. That meant it had to be elevated – so he put it up on a wood frame (wood under the furnace is a fire risk - duh). The filter, instead of being on the side, is on the bottom – you need a screwdriver to take off the front of the furnace to change the filter. A 90% efficient furnace should lean slightly forward so the hoses can properly drain to the sump on the side – this one is flat and level. It gets better from here. The fresh air intake pipe opens in the garage – so fumes from things like the car, gas can, paint, pesticides, lawn mower, and all the other fun stuff we store in a garage is sucked into the house. Not to mention if a car or lawn mower is running and it will pull in carbon monoxide. Then they ran the exhaust vent up, over and DOWN to the hole where the old furnace vented into the chimney. A 90% efficient furnace vents mostly moisture vapor and the vent is supposed to rise until exposed outside. When this vent runs
They ran it downward into the chimney and ended PCV pipe two inches in the 80 year old brick chimney. That leaves water vapor emptying into a brick and mortar chimney where it condenses into water. You can imagine that’s not good for the chimney. The inside of the chimney is a soggy mess and black muck is leaking out and down the wall into the utility room and across the floor to the drain. This 3 year old furnace needs an expensive repair to do what should have been done at installation. I had another furnace where they ran the wrong size and length of vent and the vapor cooled and condensed and ran back down into the furnace. This water burned up the inducer motor and the circuit board. We had a $1200 repair on that 3 year old furnace to fix and vent it properly. My HVAC guy said that when he does these, he actually opens the manual and reads the specs because they tell you the PVC pipe size (3 or 4 inches) based on distance and number of total turns the vent has to make and the specs change by model. (That man had installed furnaces for 30 years, and he always checked the manual.) A single straight vent can run further. One with turns cannot be as long. This one should have been vented out the side of the house – and was $1200 later. The moral of the story is, unless you know how to do it right yourself and can supervise your workers, it pays to hire specialists to do specialty work. In the long run, that can save you a lot of money. How do I find them? I look at REIAGC Vendors. I ask investors for referrals. I used to look in the yellow pages for the simple one line ads that suggest small local operators. I didn’t want the company with a fleet of trucks, uniforms, and lots of expensive overhead. I like small family run operations. Then I check them out. I ask for references, check in the Clerk of Court to see history of lawsuits, check on the Better Business Bureau web site. I call and ask them questions – if they don’t want to take time to talk to me then I move on. When I find a good vendor, I’ll use him for a long time and this effort pays off.
Carpets & Floors
sq ft
49¢ sq ft
Trigg Pendleton 513.354.4851 TPendleton@McSwainCarpets.com 14
ceramic
99¢
starting at
start ing at
49¢
vinyl start ing at
carpet
REIA GC Vendor Members Directory
downward at a 45 degree angle, it causes the moisture to condense to water.
sq ft
h a rd w o o d
2
$ 69
starting at
sq ft
t $PNQFUJUJWF 1SJDJOH t ,OPXMFEHFBCMF 4BMFT 5FBN t 4VQFSJPS $VTUPNFS 4FSWJDF
Larry Gressler ,NQSF@FD +N@M .EkBDQ
June 2016
5901 Colerain Avenue Cincinnati, Ohio 45239 Off: 513-923-4100 Cell: 513-623-7825 Fax: 513-741-6272 NMLS # 718033 www.GuardianSavingsBank.com lgressler@GuardianSavingsBank.com
Type of Business
Accounting
Accounting
Company + WebSite
Contact Info
Type of Business
Chuck Vonderhaar, CPA
Chuck Vonderhaar 513-563-0598 chuck@cpvcpa.com
Floor Restoration
Scott & Deanna Ellsworth 513-272-8400
Flooring
www.cpvpa.com
Ellsworth & Associates, CPA’s www.ellsworthcpa.com
Building Supplies
Butler County Edge-Co
Building Supplies
Pease Warehouse
Building Supplies
Surplus Warehouse
www.edgcowholesale.com
www.peasewarehouse.com
www.surplus-warehouse.com
sellsworth@ellsworthcpa.com
Company + WebSite
Contact Info
Olmec Reflections, INC.
Donald Boling 513-300-9203
www.olmeccarpetcleaninginc.com
McSwain Pro Floors www.mcswaincarpets.com
OlmecReflectionsinc@gmail.com
Jon O'Connor 513-354-4400 joconnor@mcswaincarpets.com
Brent Fening 513-868-2068 edgcobp@yahoo.com
HVAC, Electrical, Plumbing
Stephen Pease 513-867-9926 Stevep@peasewarehouse.com
Inspection Services
Criterium – Cincinnati Engineers www.criterium-cincinnati.com
Mathew Klein 513-474-9600 criterium-cincinnati@fuse.net
Bill Wiehe 513-245-2222
Property Mgmt
Berkshire Hathaway HS Commercial Division
Max Arroyo 513-772-5736 marroyo@bhhspro.com
swcincinnaticlrn@ecbarton.com
DMG Mechanicals www.dmgmechanicals.com
Scott Lane 513-825-1141 scott@dmgcontractors.com
www.firstcirclepm.com
Deb Meyer 513-266-4008 deb@odorxit.com
Rehab & Restoration
United Installs, LLC
Sasha Allen 513-344-3972 TeamAllen@fuse.net
Rehab Project Mgmt
BildWise
Matt Zecher 513-307-2112 Zecher2112@gmail.com
Real Estate Brokerage
www.bestexit.com.com
Formula Exterminators
Fred & Cindi Goff 513-671-7378 cindi.goff@gmail.com
Real Estate Brokerage
Federle Inc., Realtors
Autumnwood Funding
Chris Knoppe 614-433-0570 Chris@FundingByAW.com
Real Estate Brokerage
Outside The Box Real Estate
Cleaning Products
www.OdorXit.com
Cleaning and Evictions
Swept Away Property Cleanouts
Contractor
KASA General Contracting, Inc.
OdorXit
www.sashaallen.vpweb.com
www.kasagci.com
Exterminators
Financial Services
www.FundingByAW.com
Financial Services
Dayton Capital Partners www.DaytonCapitalPartners.com
Financial Services
Excellent Financial
Financial Services
www.guardiansavingsbank.com
Guardian Savings Bank
Darrin Carey 937-458-3303 Darrin@DaytonCapitalPartners.co m
Kelvin Mitchell 888-493-6075 excellentfinance@aol.com Sharon Altman 513-923-4100 saltman@GuardianSavingsBank. com
Financial Services
ReCasa Financial Group, LLC www.recasafinancial.com
nlawler@recasafinancial.com
Financial Services
Spring Valley Bank
Paula Stenger 513-761-6688
Floor (wood) Restoration System
www.springvalleybank.com
Fabulous Floors of Cincinnati www.fabulousfloorsusa.com
Nancy Lawler 614-221-6770
davidcaldwell@ fabulousfloorsusa.com
www.BildWise.com
Exit Best Realty
www.federleinc.com
www.OTBrealestate.com
Real Estate Services
Auction.com
Real Estate Services
CORE Group
www.aucyion.com
www.coregroupre.com
Real Estate Services
Exit My Foreclosure
Restoration
Icon Environmental
www.ExitMyForeclosure.com
www.IconPropertyRescue.com
Dan Poske 513-301-0247 dposke@cmsllc.com Marty Russell 513-545-1637 martysrussell@gmail.com Dennis Taylor 513-851-4021 dennist123@aol.com Christina Carey 513-509-2705 Christina@OTBrealestate.com Susan Kasaris 949-672-3609 Skasaris.pta@auction.com Jiries Dawaher 513-504-5565 jtd8.re@gmail.com Kristin Caledine 513-509-9814 Kristin@ExitMyForeclosure.com Jeremy Clayton 513-396-6653 clayton@IconEnvironmental.net
Security
ADT Security Services
Kristen McClanahan 513-497-7990 kmcclanahan@adt.com
Wholesale Properties
You Buy Houses
Drew White 513-471-5008 DrewWhitePix@gmail.com
pstenger@springvalleybank.com
David Caldwell 513-453-4006
www.united-installs.com
Josh Appelman 859-916-5201 josh@united-installs.com
The Investor
www.youbuyhouses.com
15
Cincinnati REIA 10945 Reed Hartman Hwy., Ste. 113 Cincinnati, OH 45242
PRESORTED STANDARD U.S.POSTAGE PAID
CINCINNATI, OH PERMIT NO. 777
Cincinnati Moved! CincinnatiREIA REIAHas is Moving! th Our General are held at: Beginning Thursday April 7Meetings our general meetings will be held at:
Crowne Plaza- Blue Ash 5901 Pfeiffer Road Ć” Cincinnati, OH 45242
Located at I-71 & Pfeiffer Road Be sure to come and check out our beautiful new location!
SATURDAY, JUNE 4, 2016 9AM – 5 PM FOUR POINTS BY SHERATON – WEST CHESTER
Apartments and Multi Units Series How to Grow Your Wealth with Apartments and Multi Units You will receive: •
•
•
Seven (7) information packed hours of training Lunch (Preregistration required for meal counts) One-on-one networking opportunities with other investors
• ALL FOR the early bird special price of $129 for one or $159 for two REIAGC Members!
Presented by the Real Estate Investors Association of Greater Cincinnati
Learn how and why people like Robert Kiyosaki and Donald Trump used apartments to generate massive cash flow! Instead of making $10,000-$20,000 once or twice a year selling or flipping a house, how would you like to make $2,000-$3,000 passive income every month for the rest of your life? How about $5,000-$7,000 per month? How about $40,000-$50,000 per month, EVERY MONTH, for the rest of your life? If you said, “Yes” to any of these questions you need to sign up for Anthony Chara’s 1-Day Apartment Investing Workshop today. Anthony Chara is founder of $uccess Classes and President of Apartment Mentors, LLC. Anthony's specialty as an international speaker and educator is teaching regular people how to successfully invest in Apartment Buildings. He'll show you why apartments/multi-units make sense in today's market, how to know the numbers inside and out, and how apartments allow you to control your own destiny when it comes to appreciation and building your wealth unlike single family homes!! Wouldn’t you like to know why some people find it easier to buy an Apartment Complex than a single family home? Come learn how they did it and get in on some terrific cash flow. Two of Anthony Chara’s recent students purchased a 150-unit complex in Louisiana with about $2000 out of pocket. Would you like to know how they did it? Then come to Anthony’s 1-Day workshop! What you’ll learn at the 1-Day Apartment Workshop: • • • • • •
Advantages & Disadvantages of Apartments Differences between Apts. & SFH’s ‘Lingo’ You Need to Know Key Ratios Used in Analyzing Apartments Analyze the ‘Numbers’ on Real Complexes Bring your own deals to be analyzed ‘live’!!
Who is Anthony Chara? In addition to being a nationally known speaker, Anthony Chara is a seasoned Real Estate investor that has successful investing and property management experience dating back to 1993. Mr. Chara turned to apartments full time in 2004 and currently owns approximately 1600 apartment units with a total asset value in excess of $43MM ranging from 14 units in Oklahoma to 179 units in Indianapolis. Presently, he's managing partner of Apartment Mentors, LLC and founder of Success Classes, LLC. During the past 20 years, he has owned or managed several successful multi-million dollar companies.
REGISTRATION Register by June 2nd for REIAGC member discounted price of $129 for 1 and $159 for 2! Name: ______________________________________________________________________________ Address:_____________________________________________________________________________ City:___________________________________________State:________________Zip:______________ Phone:______________________________________Email:____________________________________ 2nd Attendee:_________________________________________________________________________ NOTE: Please contact REIAGC staff with any accommodation or special dietary needs. Make your selection: REIAGC Member Pre-registration (before 6/2) Special Rate: ______$99 for 1 –or-
_____ $129 for 2
REIAGC Member Registration (after 6/2): ______ $129 for 1 -or- ______$159 for 2 Non-Member Registration (before 6/2) ______$129 for 1 -or- _____$159 for 2 Non-member Registration (after 6/2) _____$159 for 1 -or- ____$189 for 2 ______Register me free thru Express Success! Check method of payment: ______Check _____Credit Card Number: _________________________________________ Exp. Date: ____________ CID#____________ Signature:__________________________________________________________________ Please return completed form to REIAGC at the address below or register online at www.CincinnatiREIA.com. Cancellations are accepted without penalty up to 72 hours prior to the start of the event.
REIAGC 10945 Reed Hartman Hwy, Suite 113, Cincinnati, OH 45242 www.CincinnatREIA.com | Info@CincinnatiREIA.com | (513) 407-3137