Newsletter -May 2011

MID-AMERICA ASSOCIATION OF

Investment News
NETWORKING : EDUCATION : COMMUNITY

REAL ESTATE INVESTORS

May 5, 2011

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Contents
In This Issue
MAREI Business Members MAREI Staff Notes from Director Purchase and Hold Real Estate Get More Offers Accepted Five Excuses Boom or Bust Realtor Nationwide Open House Training Events Government Affairs Calendar Market Trends Repositioning for Big Profits Squeeze Your Membership

MAREI News
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Features ‫ ׀‬May 2011
There are 15 good reasons to buy and hold investment property according JJ Pawlowski, Investor, Broker, Lender and our guest speaker in May. The key to making money is making offers, right. While that’s certainly part of it, getting offers accepted is what causes the cash to flow. Transaction engineer Auggie Byllott shares some secrets.

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Investment News

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MAREI
Notes
Contact Information
PO Box 8685, Prairie Village KS, 66208 Phone: 913-815-0111 Fax: 816-523-4448

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

Legal Disclaimer
MAREI does not exist to render and does not give legal, tax, economic or investment advice and disclaims all liability for the action or inaction taken or not as a result of communications from or to its members, officers, directors, employees and contractors. Each individual should consult his/her own counsel, accountant and other advisors as to legal, tax, economic, investment and related matters concerning real estate and other investments.

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

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MAREI
Staff
Kim Tucker 816-523-4400 Director [email protected] Don Tucker 816-523-4400 President [email protected] Steve Burns Audio Visual [email protected]

John Welchert Meeting Ambassador 816-268-3849

Larry Prato Commercial Subgroup 913-227-4693

Spencer Cullor Commercial Subgroup 913-324-5900

Dan Goodwin 913-642-5218 Meeting Ambassador [email protected]

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Director’s Notes
As we look forward to the rest of 2011 and starting 2012 we keep referring back to the brochure on the Professional Housing Provider Program. This is program we have started as a part of our membership with National REIA. We are working to put together meetings and training events designed to help our Members who participate in this program complete the 60 hours of training including 42 hours of core courses. As this is a fairly new program at MAREI and as we have had so many brand new members come on board in the past few months, I think it is important to review what the Professional Housing Provider Program or PHP Program is and how it can benefit our Industry. As professionals who take the time to adhere to a code of ethics, to learn best practices, and be better at providing housing for sale or rent or even storage units, mobile homes, or office space for lease, we have never really had a way to show the general public that we have take the time and made the effort to be better professionals. Now, with the Professional Housing Provider program, member professionals across the country have been completing the training and adding these three little letters after their name . . . . PHP . . . Or adding that I am a Professional Housing Provider. In the not to recent past, real estate agents banded together to do the same thing. They started a National Association of Realtors, handed down specific code of ethics you needed to follow to be able to call yourself a Realtor and had further training so you earn specific designations such as ABR, ABRM, or CCIM for example. The PHP program is the same for real estate investors and maybe one day we will have the Investor name with a capital “I” trademarked and only special real estate investors will be able to call them selves Investors. But what does that do for you as an Investor and our Industry as a whole? It brings you and your business into a professional light with the general public. We will be though of as people who improve the community, help people obtain the dream of home ownership , or provide quality rental housing for those who cannot own. In many cases we find that we are still thought of as grimy, miserly, money grubbing landlords who kick granny out in the cold after we steal her house away from her with lies and trickery. This industry designation will give you the ability to show the general public otherwise. You can say, see I am a PHP which means I have a code of ethics that I follow and have taken extensive hours to training to obtain my designation and I continually study to improve myself with continuing education. So remember when you attend an event and see that we are handing out certificates of attendance at the back of the room, that they are for the PHP program. To participate in the program and obtain credit, you must be a member of MAREI, you must preregister and attend the live class in it’s entirety. And then at the end of the event, collect your certificate, and record the class in your program folder. Once you obtain your 60 hours of training including the 42 hours of key core courses, then you will receive special recognition at the MAREI meeting as well as at the National REIA Mid-Year Event. To find out more about the program, pick up a brochure at the meeting or see the Education Tab on our website. Kim Tucker

Director of MAREI For more info, go online to: http://mareinet.com/education/php/

Photos from the Lead Safe Work Practices Workshop on April 9th. Students pose in the latest look: White Jump Suits and Blue Latex Gloves.

HOLD Real Estate
Through personal real estate investing experience for the past 8 years, as well as professional experience as an investor's agent representing real estate investors, I've discovered at least 15 good reasons to buy and hold an investment property. Reason #1 - Necessity Rental property is a necessity in every community, every city, and every state, everyplace. There will always be people who, for one reason or another, won’t purchase a home and will rent instead. From poor credit, to affordability, to simplicity, to income limitations, to not wanting to own anything, the reasons people have for wanting to rent go on and on. Reason #2 - Security The importance of providing for yourself and your family by having a safe and secure job was demonstrated to me from a very young age. This safe and secure job provides a steady income with benefits, a retirement plan, and so forth. Watching as my parents worked, and my own experience from my work history, I also realized the idea of having this so called safe and secure job was actually a myth. A myth you may ask? Absolutely in my opinion! I believe it is a myth to think your job, or the jobs of your loved ones, are ever 100% secure and safe from the realisms of the corporate, credit, financial, professional, and business worlds. Life often proves it is rare to find anything guaranteed, besides taxes and death. So how does the average American ever really get ahead of the game of life? Are you ever able to say to yourself, ―My financial future really is safe and secure!‖ Yes, you can. I believe based upon my experience, real estate investing can afford you the opportunity to move beyond the rut of the 40 hour work week. Maybe not tomorrow, or next month, or next year, but in the future, when it really matters, should you chose this path, allow yourself the time to pursue it, and then work for it. Do something today and make it happen! Reason #3 – Passive Income You have a safe and secure job where you work 5 days, 40 hours a week. This is called active income.

Purchase and

Monthly Meeting
Don’t miss this event!
Date: Tuesday April 9th: Doors open at 6:00

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PHP CREDITS

Attend the May MAREI Monthly Meeting and join JJ Pawlowski local Real Estate Investor and Broker as he shares solutions to some of the more common problems facing real estate investors today.
Location: Sylvester Powell Jr Community Center: 6200 Martway in Mission Kansas
JJ Pawlowski Broker / Agent Chartwell Realty Equity Development Corp UncommonRealEstate.com 816-916-4593 Page 8

Cost: Members FREE, Guests $25 at the Door or Pre-Register for $15. See more & Register online. PHP: 1 Credit Management PHP, members only, must be pre -registered through the website to receive credit.
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You must show up and work if you want to get paid. Passive income is money that comes to you time and time again without you showing up for it. Yes, you will have had to do something at some point to create passive income. Maybe you had to take 20 hours to learn about real estate investing. Perhaps you had to put in another couple hours to paint the house. All in all you might have more than 50 hours in this home during your ownership years. Who cares? The bottom line is you are not going to work at it every day for 10, 20, 30, or even more years! This is the difference between active income and passive income. Passive income shows up for you without you showing up for it! Reason #4 - Retirement Retirement, in my opinion, is not about depending on Social Security or your family for your financial survival. Did you know as of 2006, approximately 90-95% of people at retirement age were still dependent! This is an easy statistic you can find in about 1 minute of searching the internet. Most retirees are dependent on family members, children, their job, or the government for their financial support and survival. This is a very unfortunate fact. Work all your life only to be dependent in the end? Retirement should not be about worrying every day about your 401k or other savings running out and thereby being forced to penny pinch every day. Take a look at how the financial advisors will tell you to plan. They want you to budget, save, plan, and not overspend so you have enough money to outlast your life. Die before you run out of money? Is this serious? You bet it is. Don’t get me wrong, I have nothing against financial advisors, and great ones are worth their weight in gold because their guidance and knowledge can truly make you a lot of money over time. My point is not the people Investment News

involved but the way the planning system is taught and just accepted by most. Reason #5 - Cash flow If you think back to the passive income example I talked about, you’ll remember the example of owning a rental property for the monthly passive cash flow. Would you be able to use this monthly passive cash flow when you are retired and supposed to be enjoying your life? Reason #6 - Time Why does it matter you take the time now and plan for your future financial security and success? Because of continuous improvements in health care and quality of life, the average life span for a normal adult continues to increase. If the life span in 2006 is expected to be in the 70s and 80s for males and for females, what will it increase to in 20, 30, 40, or even 50 years from now? Reason #7 - Leverage What is leverage? Leverage is the ability to do more with less. Real estate is one of the best forms of leverage an average person can utilize to get off the sidelines as a spectator and start playing in the game of life. How does this work? Take for example someone walking into a bank and asking for a loan. Let’s say the person wants to buy $100,000 worth of stamps. How much money will the bank tell the person they will need in order to do this? The answer is probably $100,000! Now, using the same example let’s say the same person wants to buy a house for $100,000. How much money will the person need to do this? The answer depends on the credit situation of the individual, but most of the time the money down will be between 3.5% 20%, or $3,500 - $20,000. This is a lot less than the $100,000 the house is worth and the person owns the house! How is this so? This is so
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speaker agenda
The May 10th Monthly MAREI meeting will host JJ Pawlowski, local Kansas City area real estate Broker and Investor with years of professional experience. He is join us to solve a few problems facing local investors today:
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Tenants Trashing Rentals Negative Cash Flow Listing on MLS Determining Scope of Work Dealing with Contractors Notice of Intent to Sell Lack of Lenders Lack of 10% Down Payment Investing with Emotion What is Exit Strategy Where Do I Start Too Much Information Where’s the Magic Bean

If you have had questions on any of these items join us as JJ provides the answers. If you have other questions, bring those along too!.

All attendees will find out how to get a FREE ebook: “The 10 Real Estate Investing Hard Lessons Gurus and Agents Will Never Tell You Upfront and How You Can Save Time, Headaches and Money and Avoid Making the Very Same Mistakes.
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because this is leverage. Reason #8 – Helping Other People You can help other people by investing in real estate? Yes, you can. There are several ways this works. One, you are providing safe and secure housing to someone who needs safe and secure housing. Secondly, by helping yourself become financially free, you will in turn be able to donate money on a regular basis to all the wonderful and worthwhile charities in the world. Third, you are helping your community when you purchase or help others purchase investment property. Finally, because you will be successful and financially free, you will be a healthier, wealthier, and a wiser person who will be able to better provide mentally, physically, financially, and emotionally to your family, friends, co-workers, and everyone you come across in your life! Reason #9 – Tax Advantages I am not an accountant and I certainly recommend you check with your own tax preparer on the various tax advantages you might see from your own real estate investing. Some of the benefits I've been able to utilize are appreciation, depreciation, legally deductible expenses, and carry forward losses. Do I understand what all of these are? No way! I appreciate my accountant. Reason #10 - Education You don’t have to have a formal education to become a real estate investor. You don’t need a college degree, you don’t need hours and hours of studying and taking tests, and you don’t need to be an accountant, Realtor, or any other type of trained or licensed professional. You don’t need to do any of the above in order to become a successful real estate investor. I know this to be fact based upon my real personal experience. Although I am a licensee now, I personally did real estate investing for years before getting a real estate license. One of the best ways to learn is to work side by Page 10

side with someone who has done exactly what you desire to accomplish. Reason #11 - Equity What is equity? In the case of real estate, equity is the difference in the value of the home and the amount owed against the house. Equity grows and grows when it is untouched over long periods of time. Someone else, your tenant, is helping you pay down your mortgage and this is how you become wealthy by investing long term in real estate. Don’t forget the fact that when you bought the house, you probably only put down 10 or 20%, so for the $25,000 or $50,000 you would have spend when looking at the example above, you would now have 7-14X or more this amount in equity! How about that for a great return on investment? Reason #12 – Permanence Life is hectic. Luckily, real estate stays put in one place. With few exceptions and Mother Nature, real estate doesn’t go anywhere. Your property will be there tomorrow, next week, and next year, 10 years from now and so forth. I once experienced the power of Mother Nature when she took one of my houses completely away in a tornado. Don’t mess with mother! Reason #13 – Business Ownership It is said by many one of the easiest ways to become financially free in this wonderful country is to own your own business. Real estate investing is a business and you should treat it as such. Real estate gives the property owner many great tax advantages. Real estate investing gives the property owner the same tax advantages plus the tax advantages of business ownership. You get to deduct all your expenses associated with your business. Reason #14 – Pay for Your Child’s Education

Are you one of the many people (parents) who look at the average cost of a four year college and it makes you cringe and tremble? I just looked today online and found several sites reporting the average cost of a private college around $30,000 per year. The average cost of a public college seems to be about $12,000 per year. I believe these numbers include tuition, room, and board. How can the average person save enough money to pay for this? So, as an example, look at buying a $100,000 piece of real estate when your child is 5 years old. How much is this real estate worth when he or she is 18 years old? Taking into account a measly appreciation of only 2% per year, the value of the house in 13 years is $129,360.66. A better 4% appreciation would yield a value of $166,507.35! Bingo! At this time, you can either sell the house (a taxable event) or refinance the house (a non-taxable event) and take out some equity to pay for school. By renting the house for 13 years, you have probably been able to pay the initial $100,000 mortgage down by tens of thousands of dollars, therefore even increasing the amount of money you have at your disposal. Reason #15 - Fix what's broken I just saw headlines that indicated about 13% of homes in the US are vacant. Many of these are foreclosures just sitting there for years. Becoming a real estate investor or helping real estate investors buy vacant homes will help fix our current real estate situation. I admit many of the above reasons and benefits of owning investment property I've discussed could each be a blog post in and of themselves. Some might be too simplistic in my examples and explanations. Hopefully though you've gotten some new ideas you can pass along to your clients or use in your own real estate investing models.

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Get More Offers Accepted
The key to making money is making offers, right? While that’s certainly part of it, getting offers accepted is what causes the cash to flow! And flow it will if you follow a few simple steps. 1. Whenever possible deal directly with a property owner. Dealing with principals will make for better and more effective negotiations and provide a basis for creating a synergistic solution. This will result in the other party having greater buy-in and increasing the probability they will see the transaction through to the end. 2. Be sure to learn their motivation…‖Why are they selling?‖ your offer(s) must solve this issue. To often investors fail to understand what the other party’s problem is and attempt to solve something the other party may not even consider an issue. People like to do business with someone they trust. In order to do this you need to build rapport and focus on their problem. 3. Whether you’re working with a real estate agent or direct with a home seller you need to be the one making the offer(s) and be present. This provides you an opportunity to explain, clarify or modify your offer 4. Never present a single offer. If you’re a one-trick pony; you know what I mean 70% minus repairs (the MAO formula) or 65% minus repairs (the wholesale MAO formula) you’ll have a tough time closing deals where the debt on the property exceeds your offer. This is not a one-size fits all business. Learn how to become a transaction engineer. 5. Make multiple offers, one all cash, one some cash now and some cash later, and no cash now and more later. Give your seller a choice and let them know you want them to accept the offer that best meets their needs. 6. Be prepared to help the seller understand your offers. You can remind them that you are running a business and that if you cannot make a profit you cannot stay n business (though that’s not their problem). 7. Let them know that you can close quickly (or on a schedule that meets their needs) and you are willing to buy their house ―as-is‖ and they won’t have to do any repairs. 8. Your lowest offer will be your all cash offer because with banks not lending, cash is expensive to come by and therefore a greater discount is required. 9. Upon presenting your offer(s) sit quietly for a moment or two and allow them to process the information. If they ask questions, provide answers. If they don’t ask questions, you can ask them which offer do they find most appealing? It will give you an insight into which type of offer might work. 10. Ask them what they plan to do if you don’t buy their house? If you don’t close on the spot, you can always remind them that they might want to consider you Plan B because everyone’s situation will change with time and circumstance. Now you have bought the property, let’s Get more Cash Flow . . . .NOW!
(Continued on page 13)

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One of the greatest opportunities we may ever see is staring us in the face. Mortgage rates have now been at historic lows for a while, the stock market has proven an unreliable wealth building vehicle for the average person. This has set the stage for building private lending relationships that can finance your real estate deals. But wait…this is an article about cash flow. Fortunately I don’t have to start over because many of these private lending candidates are also candidates for equity participation deals. Imagine, if you will, you find a great deal you can purchase for cash at a 50% – 60% loan to value. You give your investor/equity partner 60% of the deal in exchange for them coming up with the cash to buy the property. They come into the deal with immediate equity and you have no debt! If there is no debt there are no mortgage payments. You simply collect rent and pay the taxes, insurance and maintenance (unless you have your tenant take care of it). The remaining cash flow is split between you and the equity partner. Since you have used your skills and secured the deal you’ve already made a valuable contribution to the deal so you might also be able to get compensated for managing the property. You might take 8-10% off the top for management and then after paying the remaining expenses you split the remainInvestment News

ing cash with your equity partner based on whatever percentages you agreed to (in writing). You and your equity partner will divide the benefits from the property on whatever basis you establish. 50/50, 60/40, 70/30. You’ll split the cash flow, the appreciation, the depreciation and the tax benefits. It’s all up to you and whatever you negotiate. If you get really good at this you can even give up your 10% management fee and outsource property management and focus your time on finding more deals and more equity partners. The beauty of this strategy is that when you have a vacancy you don’t have an outgoing mortgage payment. This is just one of the many strategies I like to use to lower risk and increase returns. While I realize I’m giving up some of the upside, I’m trading it for a perfect risk reduction strategy. Besides, using this strategy I effectively own half a house free and clear because the equity partner and I might be 50/50 in the deal. Let’s say I was a newbie

without much experience, I might be willing to give 80% of the deal the equity partner because I’m trying to get started and don’t have cash of my own. Even if you give up 80% of your first five deals you’d effectively own the equivalent of one complete free and clear house! That’s powerful. As you develop your skills you’ll be able to command higher percentages because you’ll be a credible partner! ________________ Do you want to learn how to do a deal like this? If you’re like most investors today, you’re facing no money, no credit, and no idea where to start. That’s where the right instruction can come in. Take the time to visit the link below to join in my 7 module course from National REIA’s Online University. This course offers 3 Financing Credits for the Professional Housing Provider Program. August Byllott www.PACTProsperity.com

mareiU.

Auggie Byllott, Transaction Engineer

com

Featured national trainer on the new online training university from National REIA. Visit to preview his course Creative Financing, made up of 7 thirty minute modules. Total cost is $39.00. Page 11

Five Excuses
Real Estate Investors Make
1
I Don’t Know What to Do! This is the first excuse holding new investors back from taking action. It is a valid excuse that is easily remedied. There is a wealth of information out there for FREE or almost free. Start with online articles and webinars then move up to REIA training. This is a great way to introduce yourself to all the ways you can participate in real estate investing. Once you find your niche, buy the course and follow the step by step instructions. I Need _______ (Insert Item Here) First! This one is just a way of putting off taking action. New Investors spend hours, days, weeks finding a phone number, designing logos, creating websites, and buying business cards. Yes, all items that you really need, but you can get everything you need for under $100. So what if it isn’t perfect, you can always change it next month as you refine your investing business. I Don’t Have any Funding! Yes this is an excuse. Go out there and become involved in your local real estate investor association or join one online if there is not one in your area. Then go call on signs, send out marketing for deals, go look at properties. When you find a deal that is truly a deal, partner with someone at the group. Honestly, the money will come when you find a true deal.

4

I Can’t Find any Deals! Not sitting here wining you can’t. No matter what type of deal is your focus, you can look in the local papers, online classifieds, for sale by owner sites. Have a particular niche? Create a list of potential motivated sellers and market to them through direct mail, online classifieds, and social media. The more people you call or network with, the more postcards you send out, the more deals you will have to evaluate. The more you evaluate, the sooner you find a deal. I Don’t Have Time! Time is very valuable, but remember Rome was not built in a day or by one person, and your Real Estate Empire will not be either. You can choose to make time and hire assistance or technology to take some of the time consuming tasks from your shoulders.

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5

Sometimes we say ―I Don’t Have Time?‖ but what we really mean is ―There is too much to do and I Don’t know where to start.‖ This is where having training and support from the local REIA group can assist you. From the training you can outline all the steps and start tackling them one at a time and where ever possible put technology in place to do the task for you. You will find resources for technology and key team players to help you with the tasks at the local REIA groups.
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Is the Sky Falling or is Kansas City Real Estate about to Boom?
Local Realtor Eric Deeter shares in his blog . . . At www.EricDeeter.com “The Kansas City Business Journal reports that Kansas City metro real estate sales are down 13% compared to this time last year. And prices of existing homes declined an average of 5%. And there is no shortage of pundits on TV telling how we’re still going to see a mass of foreclosures. But when you look back at last year you have to keep in mind that we had an artificial stimulus to the market: the “first time buyer tax credit”. This was the government’s attempt to goose the market. It worked, & most of the sales for the year happened in the first quarter.” We have to keep in mind when we are looking at comparable sales for the past year that we had an artificially high volume of sales through April 30th, 2010. Sales that seem to virtually stop on April 30th, picked up slightly as we went into October and then dropped off during the cold of the holidays and winter. Eric goes on to point out that . . . ―This year may play out to be slower than last year, but there are a lot of reasons to be optimistic about the future. Fortune magazine has an article this month featuring data from a company named Metrostudy. They conduct real estate research in 19 states, covering about 65% of the US market. Metrostudy is forecasting a housing shortage looming in the near future. In a recent blog post they predict that the market is at the bottom and will begin working its way back up from here on out.”
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or Bust

“If you live in the Kansas City metro you still have a good opportunity to get a bargain on a good home. However, getting a home you love at a good price is not as easy as the media will lead you to believe. Houses in good repair and well-staged are selling well.” Take a look at the average suburban, owner occupied neighborhood and you will find investors competing with home buyers to get a good deal on the bank owned homes, the average homes that could use a bit of spruce up sitting on the market for days on end, and the all updated houses if about the same if not a bit higher than the average houses are moving in 30 to 60 days. So if you are buying homes to resell be sure to do your homework. Know what the other houses in the area look like the ones that have been on the market for ever and the ones selling in a month. Renovate accordingly. Also be sure you know the ins and outs of FHA financing and the special buyer incentive programs that are currently available. Do you homework, know the numbers, and don’t get greedy and you will be on your way to Rehab Profits.
Eric Deeter Realtor / Investor Realty Resource
115 E Gregory Blvd Kansas City, MO 64114 816-523-4400 office

913-579-3354 direct [email protected] www.EricDeeter.com

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MORTGAGE MINUTE
Power Saver Program: HUD selects lenders to participate in new pilot program to help homeowners pay for energy improvements to their homes. FHA PowerSaver program to offer low-cost financing to credit-worthy borrowers. Expiring Commercial Loans: The US SBA is offering their CDC/504 Program to help refinance Commercial Loans that need to be refinanced in the next 2 years and have been unable to find a refinancing sources. Private Debt Market for Multifamily: Depending on how the reform of Government Sponsored Enterprise like Fannie & Freddie plays out, we could see a return to private sector loans of the past. FHA Premiums Increasing: Mortgage insurance premiums for FHA loans have increased by 25 basis points for loans that were started or assigned on or after the 18th of April. This is the third increase in premiums in the last 12 months. These increases are being put into place to restore the agency’s funds, which remain under a 2% reserve that is required. Read more about all of these topics on the MAREI Blog for 05/03.

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MAREI Internships
Managing Websites Booking Events Selling Advertising Graphic Design

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Investment News

Page 15

During the weekend of June 4-5, 2011 REALTOR Association's from across the country will be promoting a Nationwide Open House Weekend. REALTORS will be out in force holding open homes and talking about the benefits of homeownership. Here are 4 tips to make sure you open house is effective.

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Prepare your Property: There are 1000’s of

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Coordinate with your Neighbors: Coordi-

articles for tips on how to have your home all renovated, yard all spruced up, home cleaned professionally, and staged as your budget will allow. So start preparing your property now, so you will be ready the first week end in June.

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nate all the other homes for sale in the area so that you are all open at the same time and you are all coordinating the advertising. Have maps of every open home available to direct traffic. The more houses open, the more traffic you are going to generate.

Prepare your Marketing Pieces: Review

your marketing pieces to see where you need to order new: yard signs, directional pointers to direct traffic, flyers for the flyer box, flyers for the house, banners. It may take a few weeks for newly ordered items to arrive, so order now.

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Get Creative: Create a theme to generate

traffic from one house to another. Example pick up a playing card at each house for a winning poker hand and at the end of the day, the best hand wins a gas card.

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Prepare your Takeaway Items: Ideally, you

Schedule Your Marketing: You can create a

want to sell your property with the open house. But it the event that this house is not the one the viewers want, you want to have items that they take away from the open house that teach them about the benefits of home ownership, the home buying process, how financing works, special home buyer programs available in the area, and even your special home buying programs, if for example you offer lease to own.

lot of traffic with your signs and announcing the open house, but to create the most traffic, take a few more steps. Think about the advertising you want to do online, in the neighborhood and on social media now so you know what steps to take and when to take them. To this end, be sure to check out the Open House Tool Box on the MAREI website for more marketing ideas: http:// mareinet.com/marei-tool-box/openhouse/

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“Flexible rehab options and purchase financing for qualified investors! Ann Wilkinson Vice President Mortgage Loan Production 12501 Antioch Rd Overland Park, KS 66213 Ph: (913) 402-1500 Fax: (913) 402-0673 [email protected] www.ArgentineFed.com

For Investors By Investors
In this market, you want an agent on your side that has the knowledge, the ability, the EXPERIENCE, and the resources to help you!
Do you have a house you need to sell? A wholesale or Assignment you need an end buyer for? We are looking for homes to Rehab and Sell to First Time Home Buyers. Please add us to your Buyer List. Parameters:

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After Repair Value $120,000 to $180,000 3-4 Bedroom, 1.5+ Bath Basement & Garage Preferred Like Post 1978, but will consider older Cash Buyers, no Appraisals or Loan Qualification Realty Resource 115 E Gregory, KCMO 816-523-4400

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Investment News

www.RealtyResourceKC.com Page 17

TRAINING
HUD Homes
It’s a Whole New REO World
Make small chunks of cash by wholesaling properties! Join us and learn:
      
Date & Time May 14th 9-10 pm Location 4540 Main Kansas City, MO PHP 0 PHP Informational Only Cost Members and Non-Members FREE Register Online

What is a HUD Home? Where can you find out about HUD Houses? How do you get inside of HUD Home? What do all those codes on the HUD website mean? Do I need a Realtor or can I go it alone? How do I make an offer on a HUD Home? What changed in the last year?

Workshop offered by Realtor and Investor JJ Pawlowski with Chartwell Realty.

Crime FREE Housing
FREE Phase One 8 Hour Seminar
The Advanced Management Techniques Seminar is a FREE 8 hour seminar that is Phase One of the three phases of the Crime Free Multi Housing Program. Breakfast, lunch, and resource material are provided at no cost as well. The seminars generally last from 8:00 AM to 5:00 PM. The agenda consists of 8 blocks of instruction.

Date & Time May 18th & 24th 1-4 pm Location See Calendar 2 Locations PHP 2 Credit Landlord/ Tenant 6 Management Cost Free—Registration details online

 Screening  Leases  Evictions

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Drug Identification Meth Labs Crime Prevention

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Workshop taught by Mid-America Crime Free Housing and affiliated Attorneys and Police Officers.

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EVENTS
May Webinars
Learning at Home
May 24: 6 Business Building Webinars

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The Top 5 Tech Trends and Tools Reshaping the Real Estate Industry For Brokers, Managers & Marketing Directors, Shift: It’s More than Just Social Media Five Simple Steps to Time Management & Organization How to Dominate Your Market with the Power of Video How 7 Agents are Using the Power of Facebook Get the Listing . . . Priced right w/ KC’s Brad Korn

MAREI Training
Give Back
MAREI is looking to partner with local experts to create workshops and trainings for our local members. Did you know that one of the best ways to generate new clients or people to bring you deals is to teach your specialty and build credibility. Your students become your customers or the new investors who will bring you deals.
Date & Time April 14th 1-4 pm Location 115 E Gregory Kansas City, MO PHP 1 Credit Marketing 2 Credits Mgmt Cost Members $39 Non-Members $49 Register Online

Workshop taught by YOU from YOUR company sharing your many YEARS of Experiences.

Investment News

Page 21

Government Affairs
 Qualified Residential Mortgage
NAR has launched a website focused on the issues raised by the proposed rule defining a Qualified Residential Mortgage (QRM). The proposed rule is the first step in implementing a provision of the Dodd-Frank Act that requires lenders that securitize mortgage loans to retain 5% of the credit risk - unless the mortgage is a QRM or is otherwise exempt (for example, FHA mortgages are also exempt). The proposed rule includes a very tight definition of QRM: a 20% downpayment, low debt-to -income ratios, and other strict credit criteria. NAR opposes such a narrow definition due to concerns that QRM-eligible mortgages will become the standard and limit the ability of responsible consumers who maintain good credit and seek safe loan products to qualify for affordable mortgages. Learn more at NAR’s QRM website: http:// www.realtor.org/topics/qrm

 Mortgage Interest Deduction
We have sent out several calls to action regarding the possible discussion of the reduction of the Mortgage Interest Deduction that we have all benefited from as home owners for many years. This issue has been referred to committee, and your representatives need to know your views on this when it comes time for them to voice your opinions through discussion on the issue and possible votes. To find out more about this issue and to send a letter to your representatives, please visit www.RealtorActionCenter.com . . . You don’t have to be a Realtor to Take Action.

 Investor Issues
There are many issue churning about in Government Halls across the country. Locally MAREI has partnered with two services to bring you the latest information about potential legislation:  State Net Capital Journal: Tracks Issue across the nation and is updated each week our state capitals are in session.  Powers Report: Tracks Issues in Jefferson City alone. We update weekly as long as they are in session.  We are looking for a resource that tracks Topeka only, if you know of one, please email us at [email protected] To read the latest update visit www.MAREInet.com/government-affairs/ legislation-tracking

 Water Department
The Kansas City Water Department is struggling to resolve issues that they are not quite sure are issues. In an effort to assist them identify problems, MAREI is collecting data from our members. We have a start at www.MAREInet.com/kcmo-water where we have assembled some specific issues. We need your help, you can comment to the post with your own issues or email them to [email protected]

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May 7 May 8 May 8 May 9 May 10

Community Holiday Networking Deadline Meeting 1 Credit PHP

Donation Day for Habitat for Humanities Restore Mother’s Day Lee’s Summit Investor Breakfast To Reserve Vendor Table for Tuesday’s Meeting Monthly Meeting: Top Problems of today’s real estate investor JJ Pawlowski Commercial Investors Group Donation Day for Habitat for Humanities Restore Mid-America Crime Free, Free Housing Phase One Seminar: 8 Hour Training Donation Day for Habitat for Humanities Restore FREE One Day Workshop: Larry Goins & Alan Gowgill—Real Estate Day Trading Mid-America Crime Free, Free Housing Phase One Seminar: 8 Hour Training Afternoon of Realtor.org Training Webinars KCRAR Community Event: Shredding Party Commercial Investors Group Donation Day for Habitat for Humanities Restore Donation Day for Habitat for Humanities Restore NAR: How to become a marketing expert and have your phone ring off the hook Commercial Investors Group Understanding & Applying the Uniform Appraisal Dataset

CALENDAR

Details, Times, Locations, Cost & Registration at www.MAREInet.com

May 11 May 14 May 18

Networking Community Workshop 8 Credits PHP

May 21 May 23 May 24

Community Chicago Workshop 8 Credits PHP

May 24 May 25 May 25 May 28 June 4 June 7 June 8 June 9

Webinar Community Networking Community Community Webinar Networking Webinar

Investment News

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Market Trends
Kansas City Market Data
For a good overview of market activity, every month on about the 15th market stats recapping the prior month's activity are posted on www.kcrar.com. Links to many prior months' reports are also posted for reference and comparisons. Go online for the full report, a brief summary of which (from the most-recently posted stats for March 2011) shows:

―Aspiring homeowners should focus their energies on locking down a low mortgage rate sooner than later. While home prices are unlikely to return to pre-crash levels, today’s low interest rates will likely rise thanks to inflation and spikes in the Fed rates,‖ notes Shuman. ―As the government wind downs its role in the mortgage markets higher mortgage interest rates will be inevitable.‖ Read the full report on Trulila.com

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An average combined (new and existing) sales price of $149,984, 5% lower than March 2010. Combined home sales of 1,884, 47% higher than the previous month. Combined home inventory of 16,808, virtually no change from March 2010. Supply of homes on the market (calculated by dividing inventory by the 12-month average of the number of sales) was 8.9 months for combined new and existing. This represents a market favoring buyers since the supply exceeds 6 months.

Renters Lack Affordable Options
Harvard study says today’s renters lack affordable housing options. In the past, people who were struggling to pay rent and utilities were measured by the 30 percent rule. If you spent more than 30 percent of your income on housing costs, you were considered to have heavy housing cost burdens. The study shows that now 1 in 4 are spending more than 50%. We are also seeing that apartment owners are seeing growth in rentals around the country and we expect the strain on rentals to grow as new renters both people growing up and moving out as well as people being foreclosed on come into the market and very little new supply being built. And there is further strain with shrinking supply in housing stock. More demand, causing higher rental prices. Read the full article on MultifamilyExecutive.com

Homeownership Affordability
Trulia reveals trend towards homeownership where affordability to buy versus rents extends to almost four in five major US cities. This is a study of the 50 largest cities to find if it is more favorable to rent or to buy. The Rent V Buy Index last quarter revealed that in 72% of the largest 50 cities, it was more advantageous to buy that rent a two bedroom home. Because of rising rents, falling home prices and low mortgage rates, we find that only 3 cities that renting is more favorable. Those three cities New York, Fort Worth and Kansas City. Some things to consider ―With home prices nearing a dou-

Inflation Watch
Inflation is very important to the Real Estate community because it ultimately affects mortgage rates and the ability of home buyers to purchase a home. The report from the economists at the National Association of Realtors tells us that if the fed lowers interest rates to stimulate the economy, we could see more buyers, but we can also see raising prices. We see this in the media quite often of late. Only now that as we are seeing inflation they are talking about raising interest rates to curb the inflation. Prices are inching up in consumer prices quite a bit in energy prices, computers, household furnishings, and more. So economist with NAR and in the media expect the fed to increase interest rates, reducing the number of buyers. To read the full report, visit Realtor.org.

ble dip and more foreclosures expected to flood the housing market over the next two years, the decision between renting and buying a home across most of the country has clearly moved in favor of buying,‖ says Ken Shuman, Head of Communications at Trulia. ―As we head into the summer buying season, those looking to buy a home should be encouraged by improvements in the market and feel optimistic about their chances of finding an affordable home, much more so than in previous years.‖

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See all properties on the classified page on MAREInet.com
Offered As Address City Price Bed/ Bath Contact Phone

Turn Key Turn Key Turn Key Fixer Fixer Turn Key Short Sale Short Sale Rehabbed Turn Key Seller Fin Rental Rehab Rehab Fixer Fixer Rental Fixer Leased RTO Fixer Fixer Turn Key

5 Single Family 5 Single Family 5 Single Family 3914 Norton 2315 E 60th St 5632 Highland 4630 Mersington 608 W 101st Tr

Kansas City, MO $250,000 Kansas City, MO $175,000 Kansas City, MO $198,500 Kansas City, MO $10,000 Kansas City, MO $21,500 Kansas City, MO $34,750 Kansas City, MO Kansas City, MO $78,000

Assort Assort Assort 2/1 4/1 3/1 5/1 4/2 3/2

Kim Tucker RR Kim Tucker RR Kim Tucker RR

816-523-4400 816-523-4400 816-523-4400

Christoph Becker 816-419-1165 Christoph Becker 816-419-1165 Anne Sieg KW Eric Deeter RR Eric Deeter RR 816-918-0840 913-579-3354 913-579-3354

3305 Bellefontaine Kansas City, MO $32,000 5 Single Family 3 Single Family 5404 Euclid 8129 Wayne 2315 E 60th St 4418 Forest Kansas City $190,000

Christoph Becker 816-419-1165 816-523-4400 816-523-4400

Assorted Kim Tucker RR Assorted Kim tucker RR 3/1 3/2 4/2 4/2 4/2 4/2 3/1 4/2 3 / 2.5 3/2 2/1 Assort

Kansas City, MO $150,000 Kansas City, MO $22,500 Kansas City, MO $54,500 Kansas City, MO $24,500 Kansas City, MO $19,500 Grandview, MO $25,000

Christoph Becker 816-419-1165 Eric Deeter RR 913-579-3354

Christoph Becker 816-419-1165 Christoph Becker 816-419-1165 Frank Janssen Frank Janssen 816-359-3337 816-359-3337

4210 E 54th St 5617 Lydia 2128 E 83rd 1917 SE Picadilly 2508 Chelsea 5434 E 27th Tr 10 Single Family

Kansas City, MO $42,000 Kansas City, MO $20,000 Kansas City, MO $39,000 Blue Springs, MO $118,000 Kansas City, MO $12,900 Kansas City, MO $10,850 Kansas City $344,000

Christoph Becker 816-419-1165 Frank Janssen Frank Janssen Eric Deeter RR Eric Deeter RR Eric Deeter RR 816-359-3337 816-359-3337 913-579-3354 913-579-3354 913-579-3354

Investment News

Page 25

Repositioning
For BIG Profits
If you would like to justify and increase in rents or increase the value of your multifamily property, one of the main ways this is done is through a process called "Repositioning." Most people are familiar with rehabbing a property, but repositionings can be much more than just a physical change to your property. Three ways you can reposition your multifamily property: Cosmetic: Cosmetic changes consist of changing the aspects of the property to increase its appeal such as landscaping, restriping and resurfacing parking lots, painting, adding signage, or changing interior or exterior finishes. It is the easiest and least involved strategy and it can have a dramatic impact on how your tenants feel when they arrive at your property and decide how much they are willing to pay each month to live there. Structural: This option is usually more involved. When doing a structural repositioning it involves some of the following: changing mechanical systems, adding decks, changing the layout, or constructing new amenities such as pools or exercise rooms to capture additional revenue. This is typically much more involved and can have a dramatic impact on the property, but usually has the highest cost and is the most disruptive to your current tenant base. Operational: This option consists of changing the way the property operates. Typically it can include changing management companies or managers, removing troubling tenants, bringing in a different type of tenant with more disposable income, increasing occupancy, or adding additional revenue opportunities such as laundry rentals, carports, etc. Why reposition? – Highest and Best Use

Member Expert: Spencer Cullor Director of Commercial Acquisitions with Cullor Properties. 913.324.5900 [email protected] Look for Spencer on Facebook and Twitter.

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Increase Income: A higher quality property attracts a tenant with more disposable income who may be willing to pay more to live there, allowing you to increase rents or realize additional income streams such as renting carports, or laundry machines, resulting in more cash flow.

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Control Expenses: By replacing old energy inefficient HVAC systems, or add(Continued on page 27)

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ing a utility bill-back program or individual utility meters, you can decrease your expenses as you pass more of them over to the tenant, increasing revenue and lowering expenses.

and have a plan. Potential pitfalls to avoid:





Force Appreciation: By increasing income and controlling expenses you can force appreciation and increase the value of your property dramatically. Remember, just a $10 per month increase in income or decrease in expenses across 100 units can increase your income by $1000 a month and at a 10% Capitalization Rate (CAP Rate) increase the value of your property by over $120K. Ease of Management: When word gets out that a property is being improved and has great management, it attracts more reliable tenants that will, in return, take better care of their individual apartments. This will result in increased occupancy, increased rents, lower turnover costs, decreased rent delinquency, and fewer service requests. Not only does this save you money, it also makes the property easier to manage and more profitable to own. Why isn't everyone doing it? You might ask yourself, if repositioning a property is so great, why isn't everyone doing it? The simple answer is that not all properties will benefit equally from repositioning. You need to understand the market, know your competition, do your research to figure out if a repositioning is the right strategy for you,

Over-improving the property: You need to have a good understanding of who your tenant is. If you are in CClass area with mostly service employees and you have rehabbed your apartments to be fit for celebrity clientele, your tenants will love you, but you won't be able to meet your rental income goals.

positionings take time and money. A minor repositioning can range between $1,000 and $3,000 per unit. More extensive rehabs can cost upwards of $10,000 per unit. Make sure you have the money to finish the job properly once you get started. There is nothing worse than cutting corners because you ran out of money halfway through. The recipe for repositioning success Repositioning can be one of the fastest ways to increase rents on your property, lower expenses, and lower the management burdens, resulting in an increased net operating income and less management headaches. You can completely rehab the property, or just change some paint colors, or management. Whichever option you chose, you need to have a well thought out plan backed by research and realistic expectations. With a clear plan in place, repositionings can be the fastest way to increase your cash flow and add significant value to your property.

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Thinking you can always change the class of a property: If you have a 1960's property in a C-Class neighborhood, almost no amount of upgrades is going to change it into a B-Class property.

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Making unrealistic assumptions on how much you can raise rents: You must understand what your competition is offering and have solid data backing up your rental rates. What are similar properties renting for? Return on investment needs to be a major driver. Underestimating the cost of the repositioning: Re-

Track Foreclosures
Complete Details Including Addresses Jackson, Clay, Platte EZ Data Group Foreclosure

Lead Lists
Pre-Notice of Default Pre-Foreclosure Affluent Consumer Free & Clear Homeowner Absentee Owners Newly Listed Homes New Business leads Custom Consumer Leads EZ Data Group Leads

Investment News

Page 27

Squeeze Your
Membership!
Besides all the awesome networking and exceptional speakers at the monthly meetings, are you taking advantage of everything MAREI has to offer you? As a member of MAREI you have a ton of benefits available, all as a part of your annual membership dues:
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Message Board: Did you know that when you post a message on the message board it goes out to all members who have valid email addresses? Classifieds: We post every property that is in our classifieds at least once in the monthly newsletter and blast it out to the email database at least once. Home Depot: A biannual rebate of 2% on your net purchases at the Home Depot and the Home Depot Tool Rental. We have seen several $300 checks here in Kansas City and one in Florida for $3,000 with this program for 6 months of purchases. Sherwin-Williams: One of the most popular and easiest used. Take your discount card for up to 40% off on paint, paint supplies, & equipment, and where available floor coverings, and window treatments. Card included in your membership package. FedEx Office: Up to 22% off shipping and up to 20% off on copying and printing services at any Fed Ex Office. Office Max: From printing & binding, to finishing & customization. Plus all your office supply needs. Offering discounts of up to 60%. Rentals.com: Market your rental property online, for fewer vacancies on a top ranked website. Offering 20% discounts off regular price. AAA Screening: Get exceptional screening service for all your tenants, contractors, and employees. Discounts on registration and all searches.

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To access discounts, obtain codes, or to register as needed, see instructions on the Member Discounts Page in the Member Area!