re investment news november 2017

RENOVEMBER 2017

T H I S I S S U E Insurance Options for 2018

MAREI Member Benefits for 2018

Self Directed Health Savings Accounts

Subejct To Investing, Examples

Active Vs Passive Investing Strategies

Your Network is your Networth

R E A L E S T A T E N E W S

Seller Financing and HR 1360

The GOP Tax Plan

Rental Licensing & Inspections in

Kansas City Missouri

M A R E I . O R G

S T L O U I S I N V E S T O R E D W A R D O ' D A N I E LINVESTING SUBJECT TO - NOVEMBER 14TH

N EW S L E T T E R O F M I D - AM E R I C A A S S O C I A T I O N

O F R E A L E S T A T E I N V E S T O R S

N E W S INVESTMENT

An Insurance Company for Real Estate Professionals

Designed specifically for the 1—4 family dwelling real estate investor. Reduce your insurance costs

and properly manage your risk. We are the experts in insuring real estate investors and understand

the real estate business and what investors like you look for and need in a comprehensive

insurance program. For Rental Property, Rental Unit Insurance, General Liability and Other

Insurance

"It was a chore to switch over as it would be with any

company, but we found we would be using the same

insurance company, cheaper monthly premiums, lower

deductibles, and in many cases a higher coverage on the

property. "

Stacy Bichelmeyer, Archway Homes

Renter's Insurance: For as little as $5.00 a month, your tenant can purchase the renter's

insurance coverage that you already require. For an additional premium, they can add coverage

for their belongings, including valuable items. You are listed as Additional Interest on their

policy so that you know their policy is valid. Make sure your tenants are covered.

Get a Quote TodayFind out if we can save you money on your insurance expenses.

Give us a call at 1.800.579.0652 or email [email protected] or visit

RealProtect.com

You will find a list of other groups complete with links to details that

meet through out the Kansas City Metro area listed at

MAREI.org/Calendar/Other-Groups

NOV MTG

FROM OTHER GROUPS >

THE CALENDARMARE I . ORG / CA L ENDAR

See full day workshop

page 5

INVESTING SUBJECT TO WITH EDWARD O'DANIEL

NETWORKING D E A L T A B L E & B U S I N E S S C A R D E X C H A N G E

One of the key benefits of attending the monthly meeting from 6 pm to 7

pm is to meet with each of the vendors in the vendor hall and to network

with others. We invite all Members to bring their real estate investment

deal flyers of properties for sales, deals looking for partners or other

investment opportunities to the deal table. We do ask that you include your

name and contact information. Also bring your business cards for the card

exchange. Both tables are in the premeeting space outside of the meeting

room.

Learn how to buy properties with little to no money by purchasing subject to the seller's existing financing. This is a great tool for buy and hold investors to have in their tool box to build their portfolio and for wholesalers and flippers to acquire property and take posession before selling.

Join us Tuesday, November 14th when we welcome special guest St Louis Real Estate Investor, Property Manager and Investing Coach Edward O'Daniel,

Monthly meetings are held at the Holiday Inn at 8787 Reeder Road, Overland Park, KS. MAREI Members & First Time Guests who Pre-Register at MAREI.org attend free - all others pay $25 at the door or $15 online.

NETWORKING FOR TOYS FOR TOTS

DECEMBER

Bring a new unwrapped toy or gift card to the December meeting and join us for

facilitated networking. event so you can meet new people. Join us on Tuesday,

December 12th and bring your toy - this meeting is free to everyone who brings

something for Toys for Tots or shows us an online Donation in the past 30 days.

03RE INVESTMENT NEWS

Mailing Address:

6709 W 119th #332

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Phone: 913-815-0111

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Email: [email protected]

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RE Investment News are not necessarily

endorsed by Mid-America Association of

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course of action regarding financial,

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America Association of REal Estate

Investors.

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oportunties or membership.

04 RE INVESTMENT NEWS WWW.MAREI.ORG

THE GOP TAX PLAN

real estate news

recess. Some of the policy highlights include:

The Seller Finance Coalition formed several years ago by several note investors including Eddie Speed at NoteSchool has been working hard to change the Seller Finance Laws so that seller financing for investors is not quite so tough. They have a bill in the house - HR1360 with so far 20 co-sponsors. They are hoping to add a few more new sponsors over the next few weeks and that the House Financial Services Committee will make a move on their bill.

We urge you to learn more about these efforts and to reach out to your own Legislators. Please visit www.SellerFinanceCoalition.com

SELLER FINANCE & HR 1360

The new GOP Tax Plan released on November 2nd will be debated on in the House next week but the Senate will inevitably draft a different tax plan or change some of the key points. The Republicans want to have it on the President’s desk by Christmas

Reduced number of tax rate brackets from seven to four: 0%, 12%, 25%, 35%, and there continues to be the 39.6% rate for very high-income individuals.Significantly increases the standard deduction from $6,350 to $12,000 for individuals and $12,700 to $24,000.Eliminates special-interest deductions, so now you can file your taxes on a postcard. Expands the Child Tax Credit from $1,000 to $1,600.Continues the deduction for charitable contributions.Continues to allow Americans to write off state and local property taxes, up to $10,000.Repeals the Alternative Minimum Tax.Doubles the exemption of the Estate Tax, and repealing it after just six years. Lowers the Corporate tax rate to 20%, down from 35%.Reduces the tax rate on the hard-earned business income of Main Street job creators to no more than 25% so Main Street tax relief goes to the local job creators it was designed to help

004RE INVESTMENT NEWS

the most.

Learn more by watching the Podcast on Roll Call at https://www.rollcall.com/news/podcasts/podcast- gop-tax-plan-unpacked

Rental Licensing and Interior Inspections are back in the news this week.

Back in August and September, MAREI and other groups across the metro asked you to attend meetings and call city council people to get the city's proposed ordinance tabled. We were successful but they said to expect this to come back for the April Ballot.

This past week a tenant advocacy group, KC Regional Equity Network held a training session to teach their members how to collect signatures on their petition drive to get their Healthy Homes Ordinance on the Ballot in April 2018.

They are pushing to require all rental units be registered for a small fee and for these units to be inspected based on complaints, we are not sure complaints from who as well as random inspections.

We finally figured out that the city and the advocacy groups really are out to get rid of the low- end rental housing in Kansas City as bills like this will cause rent increases across the board and as the low-end rentals are updated and upgraded, rents are going to go up.

We don't really see anyway from stopping this from going on the ballot in April, so landlords start educating your tenants now. Do your math and

KANSAS CITY MISSOURI RENTAL LICENSING AND INTERIOR INSPECTIONS

05

05

Allows businesses to immediately write off the cost of new equipment. Allows the ability of small businesses to write off the interest on loans.

let them know in the properties that need no updates and upgrades what they can expect in rentincreases with the new ordinances. Educate them on their 4th Amendment Rights. And ask them to go vote.

If you have homes you believe will have multiple violations, start the repairs and upgrades now if you can find the funds to get them done and start increasing rents as the market will allow. If however, it does not make financial sense to make repairs, start thinking about what you might do with the property: sell it, rehab and flip it, abandon to the bank or abandon to the city tax sale. All viable options.

While we probably can't stop the licensing and inspections, MAREI is working with the Missouri Property Owners Association to change state law requiring to allow our Tenants the right to say yes or no to an interior inspection and to ask the inspector to obtain a warrant.

Learn more at MissouriPOA.org

INSURANCE OPTIONSRESEARCHED BY A NON INDUSTRY PERSON

by Kim Tucker

Kim Tucker here, real estate investor. I was happily living my life with a Blue Cross group policy in Kansas City that I had for our family for many years. Obama Care came and I kept my old plan, not sure if it met the requirements or not, but it was all good.

Every year it went up about $100 and in 2016 we were at about $960 a month in premiums. We moved to the Lake of the Ozarks and they canceled our insurance and when we tried to get new, we had one choice through the HealthCare.gov that was $1480 a month. It came with a $5000 deductible each for my husband and myself, didn’t cover a lot of things, but it was insurance. Fast forward to now and our policy is yet again being canceled, but we are in luck, there is a replacement policy, deductible goes up a bit, premiums go up to $1860 a

My first option is to skip the insurance altogether and put the $1800 a month into an account to cover my own expenses and hope nothing bad happens. We can all do that and from what I understand, if you do not get insurance you have to pay a penalty. This penalty for the tax year 2017 is 2.5% of your total household adjusted gross income or $695 per adult and $347.50 per child up to a maximum of $2,085. They expect this to increase in 2018, but they have not yet been announced.

I reached out to my CPA and he said based on my income, that if I wouldhave skipped the insurance, I would have to pay a penalty of $695 for me and $695 for my husband for a total penalty of $1390. I am pretty sure that this year if I would have paid the$1480 into a savings account, paid the penalty and paid cash for all medical expenses, I would have about $10,000 in that account right now.

month and no out of network doctors unless it’s an emergency and where I live, if you want to see a specialist, you have to go to out of network.

I almost forgot the awesome prescription coverage. I can use my insurance to buy prescriptions, however, they are cheaper if we pay cash.

So now I have to make some decisions and weigh some options to decide what to do and I have been conducting some research on Facebook and I have learned a few things that I thought might help a member or two.

So if you are like me and getting screwed over by Obama Care, here are some things I have learned. Please note I am not an expert and I don’t speak insurance, so please triple check everything with your own CPA and your own insurance providers.

Go Without and Pay the Penalty


08

One of the people providing insurance said to look to the Obama Care guidelines and penalty exemptions. There is one exemption that I qualify for: “The lowest- priced coverage available to you, through either a Marketplace or job-based plan, would cost more than 8.165% of your household income.” If you do the math on an $1860 premium I would need to make more than $273,00 a year to have to pay the premium, at least for 2017. So I am thinking I would be exempt from having to pay the penalty and maybe you would too, but I could be wrong.

But what if something horrible happened, someone got cancer or needed surgery and then we would be screwed even more!

Health Savings Accounts

I could go out and get a high deductible insurance plan, which I already have and then every year contribute up to the maximum amount of $2,400 for one person or $6,750 for a family in 2017 into this account tax-free. This is in addition to paying the Health Insurance Premiums. Then out of this account, we could pay copays and prescriptions and the like.

What would be very financial sound according to my Self Directed Guru Friends would be to open this account where I have my Self Directed IRA and take this money and use it to invest in real estate and mortgage notes and not touch it. And grow this money tax-free for some future date to use it for medical expenses. So if at all possible, we need to start one now for that emergency fund for the future. But for now, other than reducing my taxable income, this does not seem to be my solution. My insurance would still cost $1860 a month.

COOP Plans

In my research, I spoke with several people who offered coop plans that are not quite an insurance. You can research

As I look at these requirements, I and many of the other men and women reading this do not need all those above items. And guess what, if you find the right person, they will give you a quote that is WAYYYY cheaper than what you are looking at, but they don’t quite meet the Obama Care Guide Lines.

I received a quote from Laura Peretic, at a private insurance firm here at the lake for United Health Care that was offering similar healthcare as my Obama Care Plan for $792.50 which after 12 months and my $1380 penalty, would cost me $10,890, you do the math.

So, this week I need to make my choices and cancel my Obama Care Coverage. I am pretty sure that if I go with one of the last two options costing around $10,000 annually, I could then take the leftover money and contribute to an HSA tax-free. Then flip one house a year in my HSA or lend it out and not touch it and when that emergency comes up in 5 to 10 years, have tax free money to pay for it.

I would love to get feedback from coverage providers and other small business owners to see what they are doing.

The People I consulted for this article:

Laura Peretic – CapricornInsuurance.net (573) 207-8187

Kurt Jackson – KJFinancialOnline.com (816) 582-5532

Eldon Becker – EversCPAs.com (573) 348-4141

these but the dumbed down explanation is that is a group of people who have banded together through a company. Everyone pays their “premiums” into the coop and then when you have a bill, the coop pays the bill in a similar fashion to regular health insurance.

One company that was referred to me here was Liberty Health Share and you can get a free decision guide from their website.

Alternative Plans

I spoke to several people who offer these plans. I am not an expert and would say talk to these folks, but these are packages of plans from several different sources that do much the same thing as insurance, but they are bundling several different plans to get you the coverage you need. Quite often these plans pay a specific dollar amount for different items and you or their service will negotiate a cash rate with the Doctor. And the cash rate might be a bit higher, a bit lower or right at what the plan pays.

I received quoted prices from Kurt Jackson with KF Financial in Liberty that was between $600 and $800 a month depending on if I wanted the extra coverage to make it Obama Care Compliant or if I wanted to go with the bare minimum and possibly pay the $1380 annual penalty. He does not think I would have to pay the penalty.

Regular Non-Obama Care Compliant Plans

Now this one I am still wrapping my head around, but here is how I understand it. When we go to all those websites to get a quote for insurance, they only provide us quotes that meet Qualified Health Plan guidelines that establish limits about deductibles, copays, out of pockets, as well as no pre-existing conditions, pediatric and birth control and breastfeeding coverage.

07RE INVESTMENT NEWS • PAGE

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SELF DIRECTED HEALTH SAVINGS ACCOUNTby MAREI Staff

A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP).

What makes a health plan a HDHP? First it must have a minimum deductible, which for 2017 is $1,300 for a single person or $2,600 for a family plan and it must have a maximum out of pocket epense of $6,500 for a single person and $13,100 for a family.

Besides having a HDHP, to qualify to open and contributed to an HAS, you must also not be claimed as a dependent on someone elses tax returns and you must not be enrolled in medicare.

your lifetime from your Traditional IRA up to the maximum contribution limit for that year.

Your returns on your HSA from stock dividends, interest or investment profit are all earned tax free. And distributions taken to pay qualified medical expenses are not subject to tax.

One of many advantages of an HSA is that you don't have to use your contribution amount in any particular year. Instead, the funds continue to accumulate until you need them. You do not pay taxes on the earnings, and withdrawals are tax-free (as long as they are used for qualified medical expenses).

Another advantage of an HSA is that you do not lose the funds if you

You can use your HSA funds to cover hundreds of eligible health care expenses — for yourself, your spouse, and your tax dependents. Only eligible expenses can be reimbursed tax-free under your HSA. You can use HSA or funds for most doctor related medical expenses,nearly any dental, hearing, and vision expenses, including paying for the visits to those specialists. ... You can't, however, use your health account for cosmetic surgery, diet foods or gym memberships or for over the counter medications, unless you have a prescription.

You can contribute $3,400 as a single person or $6,750 as a family plus an extra catch up $1000 if you are over 50. The contributions toward an HSA are tax deductible or if made through payroll contributions they are pre-tax.. You can also fund your HSA once in


change health plans. Additionally, once you reach the age of 65 you can withdraw the funds without penalty and use your savings however you see fit.

Perhaps the biggest advantage of the HSA, is like the IRA or the 401k, it can also be self directed into items likereal estate and mortgage notes.

So you can make contributions to an HSA to lower your taxes, invest it in real etsate and earn profits within the HSA investment tax free and pull it out for qualified medical expenses or if over aget 65 for anything you want and not pay taxes.

Pretty cool.

Some Tips to get the most out of your HSA:

Become a Better Healthcare Consumer

Comparing medical services and their costs can help you get the biggest bang for your HSA buck. Be sure to take advantage of free preventative care services, review your healthcare habits, and implement positive lifestyle changes whenever possible to minimize the use of your HSA dollars down the road.

Maximize Contributions

Contributing the maximum amount to your HSA comes with incredible tax benefits. Your plan’s earning potential increases when you give the maximum dollar amount to your plan. You, then, have the right to deduct up to the full contribution amount from your tax bill, which means that you are not losing money when paying more into your HSA.

Understand Qualified Medical Expenses

HSAs offer the unique opportunity to make tax-deferred contributions and tax-free distributions, provided the withdrawals are applied toward qualified medical expenses (QMEs) or reimburse the account holder for QMEs previously paid for out of pocket. The list of QMEs is extensive, but a non-qualified distribution from an HSA can have tax and penalty implications. We encourage you to review IRS Publications 969 and 502 for detailed information about QMEs.

Use distributions wisely

While an HSA potentially covers every expense related to health and wellness, you may not want to use your plan for small costs. Paying for recurring things such as prescriptions and annual doctor’s visits out-of- pocket gives your savings account the chance to build value, which may be used for emergencies when large payouts are necessary. You should use the distribution incentive sparingly when it comes to small expenses that you can technically afford to pay.

Invest your HSA

Your HSA can invest in anything a self-directed IRA or 401(k) can, from publicly-traded securities like stocks or mutual funds to alternative investment options like real estate or precious metals. You may therefore enjoy the flexibility of self-directed retirement investing while garnering the additional tax advantages of an HSA.

Many banks and other companies offer the convenience of an HSA

account with a debit card for you to pay medical bills with. However, if you are healthy and don’t have a lot of expenses or you can fund the expenses out of pocket, you can make your HSA account grow much faster with investments other than mutual funds or savings accounts which may pay very little.

Common investment choices made by self-directed HSA participants include real estate, both domestic and foreign, options, secured and unsecured notes, including first and second liens against real estate, C corporation stock, limited liability companies, limited partnerships, trusts and much more. In my own HSA.

As a real estate entrepreneur a Self Directed HSA is just one tool that can be used to lower taxable income now through contributions . They can also lower income by shifting some of your investing to your HSA and allow the profits to be earned there tax free and then accumulate those funds until you need them for quaiflied medical expenses or after you turn 65 to use as you wish.

Several excellent resources to learn more about Self Directed HSAs inclue:

- www.TrustEtc.com - www.QuestIRA.com

And consult with your Health Care Provider in General in regards to HSA.

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SUBJECT TO INVESTING

Investing Subject To can mean a lot of

things. When buying a house it

typically means you are purchasing

the property subject to the seller's

existing mortgage. If you are a note

investor, it might mean you are a junior

lien holder and you are foreclosing

subject to a senior lien holder's

position.

As a real estate investor I have

completed a lot of real estate

transactions in the past 20 years. I

have not utilized Subject To a whole

heck of a lot, but it is an excellent tool t

have in your tool box and a strategy

that many investors use to get started.

I know one member at MAREI who

started out with plenty of money and

credit, but made it her goal to build up

her portfolio of about 100 rental

properties by utilizing Subject To so

she could use less of her own money

and less of her own credit. Rather than

30% down and a 70% loan to purchase

a house, where she would run out of

capital and soon have banks turning

her down, this investor focused on

motivated sellers that would let her take

over their payments. And so with little to

no money down, she would buy a house,

get the deed in her name and take over

the sellers exisiting mortage. She would

then go out and rent the home out or

lease option it out at a higher value than

the mortgage, allowing the tenant to pay

the mortgage and her profitl.

This is a very good strategy for the

investor because they don't have a new

loan filling up their credit report and

usually, but not always, the interest rate

on the seller's loan is way less than what

an investor would be able to obtain on a

new loan. It is also an excellent strategy

for the seller, who is probably in a

desparate financial situation with very

poor credit. By my investor friend taking

over their payments, the build up a good

credit history on that one loan and quite

possibly improved their credit.

There is one of there great advantage

and that is that it allows an investor to put

together a deal that would not have

otherwise been possible.

So lets look at the 4 deals I have been

a part of in 20 years that involved

subject to.

Our first deal was a motivated seller

who had been trying to sell a rental

property for several years, gave up on

renting it, let it go vacant and shut off

the gas because it was too expensive,

but neglected to shut off the water

because it was not so expensive.

You can imaging the results in mid

winter when it was 5 degrees, the

pipes burst and everything was frozen

when he called us.

The house needed a lot of repairs for

us to buy it rehab it and retail it. And if

he would have called us before the

frozen pipes, we might have been ale

to buy it. The frozen pipes added

$10,000 to the rehab and if they

thawed out probably another $10,000.

But no matter how we worked the

deal, the numbers for us to borrow the

purcahse and rehab, just did not work.

So he suggested he would just give us

the house, subject to his $55,000

mortgage and $598 a month

mortgage payment. Which, would

have made the deal work because it

eliminated our loan interest, but with

the frozen pipes we were still $15,000

short.

So in the end, he deeded the house

over to u and we took over his

mortgage payments, he paid us

$15,000, and we rehabbed it, sold it

and paid off his mortgage and pocked

about $20,000 in profit. If we would

have had to work with our private

partner to fund this, who at that time

got 50% of the deal, it would not have

worked out, we basically partnered

with the seller.

by Kim Tucker


My next deal is a mortgage note.

There was a house in Salt Lake City.

The home owners had an FHA 1st

mortgage which they were paying like

clockwork. They had taken out a

home equity line of credit for $20,000

in 2004 to open a restaurant. But I

guess the restaurant was a flop

because they stopped making

payments on the HELOC in 2009.

All during the downturn, the lender on

this HELOC did not try to collect

payments and in 2013, they bundled it

up with a lot of other HELOC

mortgages in 2nd position and sold

them to a hedge fund, and the hedge

fund eventually sold this one with a

few others to me.

We reached out to the borrower who

was making their payments on their

first mortgage, but not on this second

mortgage that we owned. We tried to

rehab them to get them to make the

payments. One strategy in this type of

deal is to threaten to foreclose and if

the numbers work, go ahead and

foreclose.

So we did, we threatened, we

foreclosed, we tried to negotiate to get

them to stay, and they moved out.

So now I had foreclosed on a 2nd

mortgage and owned the house -

subject to the 1st mortgage that the

borrower had been paying all along.

We had to keep paying that 1st

mortgage or get foreclosed on, which

we did. We made payments on that

first mortgage and we owned the

house, subject to this previouse

owners original 1st mortgage.

We then had options, we could sell it

as is, but it was in bad shape and

needed work. Or we could renovated

it and rent it out which would habe

been a good deal really, we had about

$20,000 in the cost of the 2nd

mortgage and legal fees and another

$10,000 in renovations. So all in all

$30,000 invested in a house that was

worth $150,000 at the time and would

rent for $1100 a month. But we didn't

want to be landlords. So we reached out

to a Realtor in the area who worked with

investors, who thought creatively and

had him list it.

Which brings us to our third subject to.

We sold this house in Salt Lake City that

we had acquired by purchasing the

defaulted 2nd mortgage and foreclosing

subject to the 1st mortgage. We kept

paying the 1st mortgage until we sold the

house.

We sold the house to a new investor who

bought the house subject to that same

existing 1st mortgage we had taken over.

So the new investor made the previous

owner's (the guy we foreclosed on for the

defaulted 2nd mortgage) mortgage

which was a little under $900 with

principle, interest, taxes and insurance

and he rented it out for $1200 on a lease

to own.

Our fourth subject to deal was a dead

deal. In the package of detaulted 2nd

mortgages that we purchased in 2013,

the seller threw in one note that was a

mess and had no hope of collecting.

This note was for $10,000 plus unpaid

interest and late fees. This note was in

2nd position behind a $99,000 1st

mortgage. And at the time the note was

aquired the home was worth about

$120,000.

We spent a little over $3,000 getting the

paperwork all set to foreclose, but

because there really was not enough

equity in the house for us to be able to

foreclose on a $10,000 mortgage subject

to the $99,000 1st mortgage and pay off

that 1st mortgage and make any money,

we just let the loan sit.

We wrote the loan off as bad debt on our

taxes in 2016.

The key to this awesome deal was that

besides the $99,000 first mortgage, our

$10,000 second mortgage, there was a

$45,000 third mortgage behind us.

So in about January of 2017 we received

a call from the holder of the third

mortgage. They were planning on

foreclosing their note from the 3rd lien

position subject to not only the 1st

mortgage but also subject to my 2nd

mortgage.

They took the 3rd mortgage to

foreclosure, which in New Mexico

where this house was, took almost 9

months. They called in October and

wanted a payoff. They had

foreclosed, taken posession and were

selling it as an REO. To sell it they had

to pay off the 1st and 2nd mortgages,

plus any of the unpaid interest on

these mortgages, plus any late fees,

plus any legal fees incurred by them.

When I figured this all up, on a note

that I had gotten basically for free, I

was owed about $14,000.

And because the third mortgage

holder had acquired the house

thorugh foreclosure subject to my

2nd mortgage, they had to pay me.

Not a bad deal.

So as you go out there and negotiate

with desparate motivated sellers,

keep this subject to thing in the back

of your head. You might find the

perfect deal to salvage by utilizing the

strategy.

We will be talking about subject to at

the November 14th MAREI Meeting.

Our special guest is a Real Estate

Invstor and Fortune Builder's Mastery

Coach, Edward O'Daniel from St

Louis. He is going to be giving us a

broad level overview of subject to, so

you can understand the basics and

formulate a deal.


ACITVE VS PASSIVE REAL ESTATE INVESTMENT STRATEGIES

by Robyn Thompson

Are you an active or passive real estate investor? This is the MAGIC question that all real estate investors should ask themselves on a regular basis, wether they know it or not. Let me explain. Many beginning investors want to focus 100 % on wholesaling and rehabbing so they can make the fast cash and big checks. They don’t want the headaches of toilets, trash and tenants. After all it feels good to take a rundown house and flip it to a rehabber and make a quick $5000 or $10,000 in a few hours or better yet tear it apart, fix it up and sell it to a first time buyer who will call it home for many years to come and you can make $25,000or $30,000 plus in just a few short months.

Active investing can be addicting and

multiple offers to the seller not just low cash offers at MAO (Maximum Allowable Offer : After Repaired Value x70% - Repairs). A transaction engineer can make offers at market value and still make huge profits. The transaction engineer understand the power of getting terms, amortization schedules, discounts for early pay off and maximizing appreciation.

A transaction engineer will focus on creating a wealth plan that will incorporate both active and passive investing because the older you get the more passive you want to become. Let me give you a real life example. We will use me as the example.

At the beginning of 2013 I noticed the US economy starting to improve. Real estate prices were at the absolute bottom in many parts of

a real adrenal rush. Ask me how I know that. My nickname is the Rehab Queen and I have been rehabbing and flipping as an active income producing investor for over 17 years. I have done over 350 properties and those quick one time paydays have been great. But…..

This one sided thinking is FLAWED. I missed the boat for the first decade and a half of my career. What you really want to be is not a wholesaler, rehabber or a landlord. The best choice is to become a transaction engineer.

A transaction engineer is a savvy investor who can create deals that no other real estate investor can do. A transaction engineer knows that some properties are more profitable to keepthan to flip.

A transaction engineer can make


08

the US. I had been watching prices tank for nearly 7 years and as Warren Buffets says “Buy Low and Sell Higher.”

I was bound and determine to not miss the next appreciation run up. After all I had moved to Florida in 2007 at the height of the market. Prices were climbing as much as $1000 per week in some neighborhoods and I wanted to ride the wave upwards. I no sooner got settled in Orlando Fl and was ready to jump in to the hottest market in the US went it sank like the Titanic.

As prices hit rock bottom in 2013 and then stabilized as low as $27 per ft , I was ready to jump in and create some massive passive wealth. I was approaching my 50th birthday and realized that retirement was approaching quicker and quicker.

I wanted to make money even if I couldn’t get out of bed. I wanted to buy and hold some really nice homes in golf course gated communities, in great school districts where tenants could afford to pay premium rents. I wanted the type of properties that would appreciate the fastest.

I had enough of the low end section 8 night mares in my younger years. I had my share of bad tenants wrecking my houses, not paying rent, having to hire attorneys and evicting tenants, being at the mercy of the courts to get the dead beats out. I promised myself never again.

So I jumped in full force and started marketing for desperate sellers with beautiful homes in beautiful neighborhoods so I could purchase enough real estate for the rents to take care of me, my farm and my horses for the rest of my days.

before your golden years would truly be golden? Is it 5, 10 or 15?

My plan is $25,000 per month after property taxes, insurance and maintenance. The $25,000 will cover me, my ranch and all 30 horses in a life style that is more than comfortable. All my properties will be free and clear within the next 5 years by the time I am 55. The best news is this income is all passive. So the moral of the story is you wholesale/rehab to keep. You flip to keep. You flip to keep and you flip a few more to keep.

You are both an active investor and a passive investor. This process will make your golden years truly golden. I look forward to coming to MAREI in January and teaching you how to evaluate deals so you will know with absolute certainty which properties are the best to rehab to flip and which properties are the best properties to keep and build massive passive wealth so you and your family will have golden years.

I bought over $3 million in properties during 2013. All of the properties were purchased with seller financing as low 0% to as high of 3% interest. Yes that is right many were at ZERO PERCENT INTEREST! The entire payment all goes to principal.

Here is an example of one property: I bought an estate sale on Hugh St in Port Orange that was listed for 4 months in the MLS at $139,900. No other real estate investor saw the deal. They are not transaction engineers.

The house needed paint and carpet which was $5,000 in repairs. I gave the seller three offers. She picked the third offer which was $130,000 purchase price with $30,000 down (this came from an flip) and I would pay the remaining $100,000 at $1000 per month for 100 months.

I rented the house out for $1250 per month which covers the taxes, insurance and the $1000 per month I owe the seller. Every month I make her a payment, the loan reduces by $1000. It all goes to my net worth and none to a bank. You do realize that the house will be paid for in just 8 1/3 years, not 30 years!

I have owned this house now for just 34 months and my loan is down to $66,000. The house has appreciated and the current value is $155,000. I have made $59,000 in principal reduction and appreciation in just 34 months. The great news is the numbers get better every month! This house will continue to pay me for the rest of my life rather I get up and go to work or not.

So let me ask you a serious question. How many of these do you need



Y O U R N E T W O R KI S YOUR NETWORTH

by Vena Jones Cox

Ask any really successful real estateentrepreneur what resource hasmade them the most money, and ifthey’re answering truthfully, they’regoing to say, “The people I’ve met.”

In fact, if you’re not making it apriority to spend time creating,growing, and nurturing your networkof colleagues and financial friends,you’re making a big mistake.

I’m not a natural networker—I would,on any given evening, rather becurled up in front of a fire with agood book than at the hottest partyin town.

In fact, if you’re ever AT a party withme, and you’re looking for me, I’mprobably the one behind the pottedplant playing with the host’s cat.

BECAUSE I NETWORKED WITHTHEM AND KNOW WHATTHEY’RE LOOKING FOR. I can sendout emails about great deals all daylong, but the person I sell it to will bethe one that I call personally and say,“You know how you were telling methat you were looking for a smallmulti-family, but that you wanted atleast 4 units and wanted one withsome upside potential? Well, guesswhat, I have the perfect deal foryou”.

Here’s more: most of the money I’veraised to buy houses in the past 5years has NOT been by standing inthe front of the room and tellingpeople I need money; it’s been bynetworking, and finding out frompeople that they have money that’snot performing the way they want itto, and finding out what they’recomfortable with in the way of

But, at the same time, I am very awareof how many millions of dollars mynetwork has earned me in the past 2+decades, and I’ve seen the nearlytragic consequences that NOT havinga network when you need one canhave.

Early on in my career, it was moreexperienced real estate associationmembers who served as my backstop,confirming (or, in some cases, totallytrashing) my evaluation of deals I wasconsidering buying . Without them, I’dhave made a lot of mistakes that Ididn’t make and passed up a lot ofopportunities I didn’t pass up.

Later in my business, when I startedwholesaling, I rarely had to advertisemy deals at all. And I don’t just sell90% of the deals I wholesale tomembers of my local REIA; I sell themto members of my local REIA

investment amount and terms, and then connecting with them later and arranging a deal for them to be in.

And I’m not the only one: I was approached by a young man a couple of weeks ago in Indianapolis who told me that at last year’s OREIA National Summit, he randomly met another attendee from Indy who happened to have a property he wanted to get rid of, and he made a deal in the bar, and made $27,000 on the house.

So what am I telling you? Make it a priority to put yourself in the way of networking opportunities at your local association, conferences and summits, and wherever else real estate investors hang out.


Join your local real estate association and get to the meetings regularly. Spend time at events like the OREIA National Real Estate Strategies Summit (one of the best networking opportunities in the US, in my opinion) and expand your network across the country.

Talk to people. Ask questions. Be curious. Yes, even if you’re an introvert like me. Even though you’re not sure they want to talk to you. I’m telling you, you’ll do more real estate, and better real estate, when you do.

By the way, be sure to come out and network with me at MAREI in March 2018.

Grab more of Vena's wisdom on her website www.REGoddess.com and be sure to look for her blog post "How to Prosper in the 2018 Real Estate Market" and be sure to come see her in KC in March.

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