CREIA ReportCarolinas Real Estate Investors Association –Member of the National Real Estate Investors Association (NaREIA) June 2007

CREIA’s June meeting will be held Monday, June 11, beginning at 6:00 p.m., A-B Tech Enka Campus off I-40 at exit 44, .5 miles west on 19/23 toward Candler. Coming from I-40 toward Candler on 19/23, turn left at Sandhill Road and the new campus (old BASF plant) will be on your left.

June meeting

Fun (and profi t) with foreclosures

– Continued Page 3

JuneProgram

By Tim ReidNewsletter Editor

Veteran real es-tate investor Roger Fox of Conover will discuss his approach to buying and selling foreclosure proper-ties when CREIA meets at 6 p.m. June 11 on A-B Tech’s west campus.

Fox is not a self-proclaimed guru sell-ing tapes and books but rather a very successful real estate investor willing to share what he has learned if you turn out to hear him.

“It’s a fun business,” he said. “I have bought 237 houses in the past seven years, most of which were foreclosures or pre-foreclosures.”

A Hickory native, Fox earned a Busi-ness Administration degree from Mars Hill College in 1969. He worked for a bank for three years and then spent more than 25 years in industrial chemi-cal sales.

Fox said he saw infomercials on real estate investing, at-tended some seminars and “realized I was hooked.” Fox started investing seriously sev-en years ago and has never looked back.

“I don’t see how you can do it part time,” he said. “To do the research and fi nd the deals, it all takes time.”

Fox takes a very straightforward approach to f inding foreclosures. His wife Regina checks the Special Proceedings in the Clerk of Court’s offi ce and makes a list of all the people facing foreclosures in four to six weeks.

He sends out cards and calls people to

see if they are going to try to keep the house or if they would be willing to sell it for what they owe.

If they are, he con-tacts the lender to see if they will accept a short sale.

You can’t make money if you don’t make deals, says Fox, who typically owns 15 to 25 homes at any given time.

“Sixty-fi ve percent of people can’t qualify for

a bank loan to buy a house,” he said. “I try to make a deal for them if it’s owner fi nancing or lease option or whatever.”

Each situation is different, and Fox tries to craft a deal that will be accepted by all parties and be profi table for him.

(Editor’s note: Lonnie Scruggs is a Virginia Beach, Va.-based real estate investor specializing in buying, selling and fi nancing used mobile homes. For more information see his Web site at www.lonniescruggs.net.)

By Lonnie ScruggsMy ad read “Mobile Home for Sale -

Will Finance,” and the phone was ring-ing off the hook. Some of the callers didn’t even bother to ask what the selling price was, or the interest rate. Most of them were interested in only two things: “How much down and how much a

Creating a mobile home money machinemonth?”

These are the type of people that will make you

rich if you understand notes and seller fi nancing. The fi nancing alone will make you rich. But if you understand how to

buy a product for wholesale, then sell that product retail and fi nance it, you will get rich much faster and easier. I’ve been doing this very thing with mobile homes for 19 years.

According to the Bureau of Census Report, there are over 9 million mobile

– Continued Page 5

More homeowners

look favorably on renting – Page 2

2 - CREIA Report

More homeowners look favorably on renting

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A new survey commissioned by the National Apartment Association fi nds that an erratic housing market in the U.S., marked by uncertainty over mortgage rates and concerns about rising foreclosures, indicates that many homeowners are seeing renting an apartment in a more favorable light than they may have in the past.

The independent survey of more than 2,100 U.S. hom-eowners1, conducted by leading market research fi rm Harris Interactive®, fi nds that 65 percent of homeowners believe that, given the current state of the real estate market, there are ad-vantages to renting as opposed to owning.

“This survey refl ects a notable contrast to what we tradi-tionally see,” said National Apartment Association (NAA) President Douglas Culkin. “In the past, people who own their homes have generally seen renting an apartment as a stepping stone to homeownership. That phenomenon has by no means disappeared, but, across the nation, we’re seeing more and more consumers opting to rent, instead of own.”

Among the key advantages of renting versus owning, hom-eowners cited:

• No susceptibility to foreclosure (25 percent). • Not being impacted by an unpredictable real estate resale

market (23 percent). • No fl uctuating interest rates (23 percent). Only 54 percent of homeowners cited the inability to build

equity if renting as a major concern about apartment or condo-minium living. Interestingly, a larger proportion of homeown-ers (62 percent) cited potential lack of privacy as a more serious consideration.

“There’s been a lot of discussion of the economic fallout of sub-prime mortgage lending that happened over the last few years,” said NAA’s Culkin. “However, little attention has been paid to how the crisis has affected current homeowners’ views of homeownership as an investment choice.”

“Make no mistake, these things are cyclical,” said Culkin. “However, this survey refl ects an interesting view of how ho-meowners value their home equity — and in our industry, we don’t see this changing any time soon.”

Adding to the complexity of the issue is the fact that hom-eowners who have lost, or may soon lose, their homes to fore-closure are now facing the added diffi culty of failing to qualify as creditworthy apartment renters.

In an effort to help these “born-again renters,” NAA, in col-– Continued Page 6

CREIA Report - 3

Foreclosures– From Page 1

“You can’t be rigid in this business,” he said. “I tell my wife I’m a transaction engineer. I’ll make it work if they have a down payment.”

Fox takes a very cost-conscious approach to doing the repairs and remodeling that goes along with real estate investing.

“I don’t use contractors. I use handymen and can get it done for one-third what contractors charge,” he said.

Fox is a big believer in building a team of trusted people to help in the various aspects of real estate investing. He said he uses the same attorney, accountant, mortgage broker and ap-praiser for all his work.

“Because they know they get all my business, they do things for me for free that they would charge others. I can call them up for quick advice any time,” he said.

Cash fl ow is always an issue, and Fox doesn’t like for his houses to sit unsold for very long.

“When I start marketing a house, I want to see it occupied in two to four weeks,” he said. “Whenever I advertise in the newspaper, I pay a few dollars extra to have it listed also on their Web site. I sold a dozen houses through the Internet in the last two years.”

Fox is active in the Catawba Valley Real Estate Investors As-sociation and has never regretted investing in real estate.

“I like to play golf and travel, and I’m taking a lot more vaca-tions now,” he said.

Fox still likes real estate investing seminars although he often fi nds that he has done more deals than the experts who lead them.

“I bought them (homes) faster than I thought I would,” he said. “I just like talking to people and fi nding a solution that works for both of us.”

Fox has been invited to discuss his investing style many times, but CREIA’s June meeting will be the fi rst time he has agreed to do so.

Fox is hoping CREIA members can help him fi nd a small house, cabin or mobile home to buy in Maggie Valley. “I’m just looking for a get-away place,” he said. He can be contacted by phone at 828 323-7357.

The CREIA main meeting will always provide a nice meal for $5. It is an individual sack prepared by our vendor. It in-cludes one sandwich, a bowl of salad, one fresh fruit, a dessert, bag of chips and a napkin. It will be available until 7:15 p.m.

Meet and eat

David Grady

I BUY HOMES828-216-5425

DAVID@IBUYHOMESLLC.COM

Visit us at: ibuyhomesllc.com

Updates on New Listings.Just email me with your name, address and phone at david@ibuyhomesllc.com

4 - CREIA Report

CREIA Report - 5

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HomesByOwner.com/Asheville RevolutionRealty.netFischer Caudle, Broker, CREIA Member 828-350-1995

homes in this country. And because the used mobile home business is so unrecognized by most entrepreneurs and inves-tors, the ones who do understand the business are making a fortune with little or no competition.

When you can buy a used mobile home for $3,000, sell it for $6,000, fi nance it and have the buyer send you a check for 2-3 three years, my calculator says that’s GOOD ENOUGH.

Mobile homes are the only affordable housing left for many people in this country, and the new homes are priced way out of the range of many who want to buy. High prices and the lack of fi nancing is creating a tremendous demand for used mobile homes with seller fi nancing.

I’ve discovered the world is full of people who want to buy things but, since many of them don’t have any fi nancial dis-cipline, the only way they can buy what they want is to fi nd someone that will offer fi nancing. And this is especially true for housing.

Some people will never save $1,000. But if you set them up on a monthly payment plan, they can make you a payment for life. Let me illustrate by sharing a case history on an actual deal I did.

This couple owned and lived in a 16-year-old, 14-by-64 single-wide mobile home located in a local park. They were moving out of the area and needed to sell their home.

After being assured by the park manager that the home could stay on the lot, I negotiated a purchase price of $3,350 for this home. I spent $132 for advertising, so I now had a total of $3,482 invested.

The home sold in 17 days for $7,900. The buyer paid $790 down and signed a note for $7,110 with 12.75 percent interest, payable at $228.39 for 38 months. So I now have a note for $7,110 and I have $2,692 left in that note. Is my calculator lying to me, or is that a 96 percent yield!

I received 38 payments ($8,678) plus the $790 down pay-ment (for a grand total of $9,468). Subtracting my original investment of $3,482 leaves a profi t of $5,986. This all took place within 38 months. And all I had to do was wait for the mail carrier to bring the checks.

Once I sold the home, my work was done. It was then time for the buyer to go to work to earn money to send me a check. And he gets to do it for 38 months while I can go fi shing. This is an excellent example of how to make your money work for you, instead of you working for your money. If you will learn and apply this concept, you won’t ever feel the same about working a “job” again.

This is just one of many notes I’ve been able to create over the past 19 years with used mobile homes. There was once a time when I could get excited about buying a real estate note paying 18 percent, but no more.

My typical “Lonnie Deal” starts at 50 percent. And this is real world stuff, not fi ction or pipe dreams. There might be something better, but so far I haven’t found it. Mobile homes are “money machines.” If you try it, I betcha you will like it.

Machine– From Page 1

Got an idea for an article about some aspect of real estate investing? Contact newsletter editor Tim Reid

at timreid4@charter.net and share your expertise.

6 - CREIA Report

Renting– From Page 2

By Lee G. Salinas, MBA, CPAIf you’re new to real estate investing, you probably haven’t

fi gured it out yet. But you will. It’s inevitable. Stick around long enough and you’ll discover that successful real estate investors have their own lingo. Yes, their own language. And if you ever talk to these investors, most of them will quickly resort to cer-tain “F” words to explain their success.

Let me share just a few of these “F” words.Focus

The all-important concept that keeps you on a clear, pur-poseful, directed path is focus. We are all focusing on some-thing at every moment. For example, right now you are focus-ing on this article. How often are we focusing on the wrong thing?

The key is to be focusing on the right thing. If you carry a lighted fl ashlight that is focused up instead of down at your feet, what would be the odds that you would trip in the dark? The odds, I say, would be fairly good. The fl ashlight is pointing at something; it just might not be pointing at the right thing.

For example, successful real estate rehabbers focus on the process – the rehab process - not the product. The product is a natural outcome of doing the rehab process well. Real estate

achievers focus on implementing a duplicatable process to keep their rehab business growing. Non-achievers lack focus and haphazardly rehab the home. If the rehabbed house turns out all right, they credit their lucky stars. If the house is a dud, well, their lucky stars were not aligned just right.

Focus is the act of actually doing those actions that lead to the desired outcomes that you have chosen for yourself. Focus on the right things and you will get the right results.

Fix and FlipIf you are just getting into real estate, fi xing and fl ipping

properties is one of the best ways to realize substantial profi ts without using your own money. You start by searching for mo-tivated sellers with junkers. In other words, fi nd people desper-ate to sell their house that is in bad condition. Once you acquire the house, you fi x it and quickly add value through a systematic rehab process. Then you resell the house quickly for a profi t.

Let’s suppose you stumble on a property suffering from ne-glect by its prior owners. You sense that there is a lot of money to be made because you can buy the property well below its market value, make the necessary repairs, and then sell the property.

Use the “F” words to succeed

- Continued Page 9

laboration with the National Multi Housing Council, is “pro-actively engaged in fi nding ways to address the growing credit problem and assist consumers in getting into apartment homes. There are a lot of people out there who need help,” said Culkin. “We want to do all we can to help them.”

This survey was conducted online within the United States by Harris Interactive on behalf of the National Apartment As-sociation between April 26 and April 30, 2007 among 2,118 adults (aged 18 and over) who own a house, townhouse, con-dominium, or cooperative apartment. Figures for region, age within gender, education, household income and race/ethnicity were weighted where necessary to bring them into line with their actual proportions in the population.

Harris Interactive is the 12th largest and fastest-growing market research fi rm in the world. One-third of the homes in America are apartment homes and many of these homes are represented by the National Apartment Association, which represents more than 6.1 million apartment homes throughout the United States and Canada. For additional information visit www.naahq.org.

CREIA Report - 7

8 - CREIA Report

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CREIA ReportCREIA Report is published monthly. Newsletter editor is

Tim Reid. Articles submitted are the express opinions and comments from various independent CREIA members and outside sources.

CREIA members are urged to submit articles for publica-tion. Deadline for articles to be published is the third Friday of each month.

CREIA Report - 9

To successfully implement a ‘fi x and fl ip’ strategy, you don’t need perfect credit, but you must have access to some cash. Pre-paring a real estate business plan to present to prospective lend-ers will vastly improve your chances of getting all the money you need to purchase the property including the repairs.

You can use the real estate business plan to provide your potential money lenders with your approach to your rehab-bing business. You need to assure them that they’ll have a fi rst mortgage on the property that will be secured by the property itself. Most importantly, your lenders need to know that that you’ll only purchase deals that are 20 to 30 percent below their after repair value.

After you purchase the property, the average turnaround on a ‘fi x and fl ip’ property is approximately 90 to 120 days from the date you purchase the property to the date you cash out on the property. This timeframe is based on 30 days to fi x it up, 30 to 45 days to sell it on the market, and usually 30 to 45 days to close. This process can be done faster, of course, under the right circumstances. However, the process can also take longer if you don’t get the property up to market standards and in selling condition in this time frame.

How many houses do you want to do? How much money do you want to make? Even on a part-time basis, doing a ‘fi x and fl ip’ several times a year can generate a nice second income. Yes. A second income that can quickly surpass your full time income.

Financial FreedomReal estate is one of the best and easiest ways to create

wealth. More millionaires have made their fortunes in real estate than anything else!

Generally, most individuals that are looking for ways to get ahead fi nancially give some serious thought to real estate investing. And many take the plunge. But why do so many that take the real estate investing plunge fall short of their fi nancial goals? Well, there are plenty of reasons to go around, but the principal reason centers around unrealistic expectations. All worthwhile endeavors require some real work.

By now you know that success comes before work only in the dictionary. Sure, it’s a cliché, but it’s also a profound truth.

There are other “F” words that permeate the vocabularies of successful real estate investors. But if you will make focus, fi x and fl ip, and fi nancial freedom a part of your vocabulary, you will be on your way to reaching your fi nancial goals.

I should know. Seldom a day goes by that I don’t use one or all of these ”F” words in my business.

‘F’ Words– From Page 6

10 - CREIA Report

The Federal Reserve at its recent meeting continued to hold interest rates steady for the seventh straight consecutive time since June of 2006, remaining unchanged at 5.25 percent.. The Fed’s decision means that the prime interest rate that commer-cial banks charge consumers for credit cards, home equity lines of credit, and other loans will remain steady as well. (http://www.informars.com/hmdc/index.asp).

While the Fed acknowledged that economic growth has slowed due to an increase in gas prices, a weaker dollar over-seas, and a slump in the housing market, it remained bullish on economic expansion for the upcoming quarter. Even though the overall housing sector continued to suffer – primarily due to the sub-prime mortgage fallout – mortgage loan applications were up from the same time a year earlier, according to the Mortgage Bankers Association.

The national average interest rate on a 30-year fi xed mort-gage was lower from 6.76 percent a year ago compared to this week’s rate of 6.38 percent, according to Informa Research Services. (see www.informars.com).

However, new home buyers are still fi nding it hard to qual-

ify for a loan at today’s market prices. This gradual cooling of the housing market has resulted in a surplus of inventory and a decline in the number of new home sales, according to a recent report issued by the Lusk Center for Real Estate at USC.

Existing homeowners, faced with increasingly higher Ad-justable Rate Mortgages are looking to refi nance to lower fi xed-interest rate loans. Lured by low-introductory teaser rates, nearly 41 percent of all variable sub-prime loans are scheduled to reset to a higher amount this year (Source: Center for Re-sponsible Lending.)

Borrowers who default on their loans could be faced with the threat of foreclosure causing consumer spending to become stagnant.

While slowing economic growth and curbing infl ation is one of the main jobs of the Fed, it remains to be seen if the forces driving the real estate market will help or hinder con-sumer spending.

Many economists believe that by not lowering interest rates in the near term may steer the economy toward a recession, causing consumer prices to rise even further.

Will consumer spending increase as mortgage rates continue to fall?

CREIA Report – 11

Each month the CREIA newsletter reaches a select group of active real estate investors. If you have a trade, service or business, or property to sell or exchange or any other advertising need, run an ad in this newsletter.

Standard Advertising Rate Schedule Member Non-MemberBusiness CardSize $ 15.00 $ 20.001/4 Page Ad $ 30.00 $ 40.001/2 Page Ad $ 60.00 $ 80.003/4 Page Ad $ 90.00 $ 120.00Full Page Ad $ 120.00 $ 160.00Insert $ 200.00 $ 250.00

Discounts10% discount for 12 months paid in advance (applies to standard advertising only)

Set Up ChargesIf ad is not camera ready, the following typesetting/setup charge will be added to bill: Full page $50; 3/4 Page $40; 1/2 Page $30; 1/4 Page $20; Business Card Size $10; revisions to completed ads will be charged by time: $35/hr.Deadline and PaymentAll advertisements must be prepaid and received no later than the third Friday of each month for the next month’s issue. Mail check (payable to CREIA) to PO Box 615, Asheville, NC 28802. Mail or email ad (camera ready or roughed out) to The Word Shoppe, P.O. Box 5504, Asheville, NC 28813. Email: dave@wordshoppe.com.Editing and Right of RefusalCREIA reserves the right to edit ads or to refuse ads.Corporate SponsorshipCorporate Sponsors may display their promotional materials and business cards at the monthly meeting on the sponsors’ table. Each sponsor has an opportunity to talk about his/her business at a scheduled monthly meeting and/or write an article for the newsletter.

Option A – 12 business card ads – $400Option B – 12 quarter-page ads – $475

Advertising Rates

New members: $150 • Membership Renewal: $100 ($25 for a second member living in the same household)Note: All members will receive a renewal form by U.S. mail during the month of their expiration. Each member will have sixty days in which to renew his membership at the lower $100 or $125 (with signifi cant other living at the same address) rate. However, after sixty days have elapsed, the cost of joining as a new member will be reinstated

at the full rate of $150 or $175.

Member Name

2nd Member’s Name

Address

Phone: H W E-Mail Address

Level of Experience (check 1) ❏ Novice ❏ Intermediate ❏ Advanced

Would you be willing to share your expertise with others? ❏ Yes ❏ No

Committee(s) I might be interested in working on:

❏ Programs ❏ Library ❏ Finance ❏ Membership

❏ Newsletter ❏ Focus groups ❏ Marketing

Date Amount Paid

Make check or money order payable to: CREIA and mail to: CREIA, P.O. Box 615, Asheville, NC 28802.

If paying by credit card: ❏ Mastercard ❏ Visa

Name On Card Number: Expiration Date

Signature:

For membership information, call Liz Talmadge, 828 775-7355, sellersolutions@charter.net. or visit www.creianc.org

The Association is an educational organization only and does not offer investment, legal, or accounting advice of any kind and is not liable for any action or inaction taken or not taken as a result of its communications.

CREIA Membership Application

Richard and Deanne AckleyBruce Black and Helen TomsJulie and Barry BrandtWayne and Jackie BuschMai G. Carter Dan Chase Thomas and Janice CodingtonMike Collins Scott Evans and Mindy BellerArleen Faul

Michele Fuller Bill Gasperson Terri Harrington Bruce Hauman Michael Havelin and Marnie MikellPete Hildebrand Larry Hodges Bud and Vicki HoganJennifer Holmes

Memberships Expiring In MayAndrew and Deb KidwellGary and Peggy LynnWarren and Jennifer NewellDick Nicholson Charlie Pierce Matt Pitcher Sharon Richardson and Paul Van DeursenNicole Rogers

Suzie Roper and Tony BarrettLydia and Gerald ScottEileen A. Shields Mimi Strang Jacki and Ed TatschBobbi Tousey Tom and Linda TroughtonDavid C. Turner and Lindsey RickrodeJeffrey and Louise Wellman

NC State Convention Jim Hitt/CREIA Board(828) 257-4949pokerjch@aol.com

Programs/Focus GroupsJudy Clodfelter(828) 683-4799silversrosebud@aol.com

Main MeetingWayne Busch(828) 456-9778wayneb4737@aol.com

Saturday SeminarsHeath Cowart 828-553-7214

CREIA is an educational organization and investors should consult an attorney or accountant before making an investment. All members and guests assume

the risk of making their own investment decisions.

12 – CREIA Report

PO Box 615Asheville, NC 28802

Upstate CREIAPresident, Deb Sisson, (864) 313-2101Debsisson@WeBuyHousesSC.comUpstateCREIA@yahoo.com

CREIA Info Line (828) 255-2727info@creianc.org • www.creianc.org Event Registration 1-800-477-1778

PresidentJim Hitt(828) 257-4949pokerjch@aol.com

Vice-PresidentGeorge Lycan(828) 231-4246glycan@charter.net

SecretaryJohn Noce(828) 255-9576mail@hotjohnnie.com

TreasurerTom Codington(828) 684-6994taxmannc@aol.com

Roy Chapman(828) 255-8191Cell: (828) 775-8191mountainNC@aol.com

Kris Kumar(828) 253-9786kriskumar@charter.net

Nicole Rogers (828) 242-4501nbrogers@gmail.com

CREIA board of directorsCREIA board of directors

CREIA committee chairsCREIA committee chairs

ProductionMelinda Hendershottinfo@kensoproperties.com

Member Services

MembershipLiz Talmadge(828) 775-7355sellersolutions@charter.net

Yahoo Groups

Alex Van Dalenavdcc@bellsouth.net(828) 242-8542

LibraryJim Miller

Area REIAsArea REIAsFoothills REIAPresidentGlen Woodfi nfoothillsreia@yahoo.com

Marketing

NewsletterTim Reidtimreid4@charter.netHome: (828) 683-9943Work: (828) 681-1900

WebmasterKris Kumarkriskumar@charter.net

Sponsors & Ad Sales

SalesBrian Fuchs(828) 251-1400real estate @windsweptmarketing.com