RE N E W S

INVESTMENT

NEWSLETTER FOR
MID-AMERICA ASSOCIATION OF
REAL ESTATE INVESTORS

MISTAKES
FOR REHAB FLIPS
from MAREI Staff

New HUD Rules on Tenant Screening

from Vena Jones-Cox

MAY 2016

PLUS
Finding Deals,
the Calendar,
the Directory,
and All Star
Networking

Average House
You want to buy the
average house in the
best neighborhood.
The best
neighborhoods are
going to have good
schools and amenities and will be easier
to sell. By being the average house,
rather than the biggest, the smallest or
the weirdest it is also going to be easier
to sell and in the eye's of the Realtors
who control the buyers - easier to
finance.

Poor Curb Appeal

Finding a house
with an overgrown
landscape and an
overall lack of curb
appeal can often be
a cheap and easy
fix. Just do some trimming, some
mulching, some power washing and
you have it all cleaned up. A little
paint on the shutters, mail box, light
fixtures and front door and it's all
brightened up.

Do Your Homework
Work your numbers
and make sure they
are correct. Never
take the seller's or
the wholesaler's
repair estimate.
The average "perfect" house you
might buy, typically needs $10,000
to $20,000 in repairs and updates.

THE PROFITABLE
REHAB FLIP
MAREI Staff

Not Every House is a Good Deal: Every house has a number and
you have to find it. But while very house has a number to be bought,
not every house is going to make a good flip.
Some Things You Can't Fix: You can't change the location of the
house, unless it's a mobile home, and that becomes a different article
entirely. So if it is located in a bad neighborhood with bad schools, no
place to buy groceries and not many jobs it will be tougher to sell.
Likewise if it is located on a busy street or the neighboring property is
less than desirable, like a run down house with a yard full of junk, or a
gas station right next door or a strip club down the street are all
things you can't fix and will affect your ability to sell the house.
Some things are an Easy Fix Sometimes you get lucky and find a
house that is not selling, primarily because the yard is overgrown and
no one can see past the clutter. Clean it out and clean it up and it's
good to go. Other times the clutter is just on the inside.
Contractor's & their Issues The mechanics and logistics of hiring a
good contractor, paying them correctly and documenting properly
can be the difference between making a profit and breaking even or
even worse, loosing money because you have to redo it, get fined, or
can't document the repairs were ever made.
These tips will help you make a profitable rehab flip.

MAREI.ORG

REHAB FLIP

Don't Pay Retail

Right now the
market is hot and
fixer uppers are at a
premium. Don't fall
into the trap of
paying more, just
to get the deal. If the numbers don't
work for you to buy, rehab and
retail, either go on to the next house
or explore a different strategy.

CONTRACTORS
Be sure to check
out your
contractors. Make
sure they have all
the necessary
licenses and
insurance. Also ask for references
from past clients and check them
out. Go see their work and if
possible visit them on a current job
site, just to see what everything
looks like while they are working.

Check out the

Neighbor's House
Once you buy the
house and fix it up,
you have to sell it
and if the house
next door is a junk
yard or in poor
repair it is going to be tough getting
buyers to overlook the mess next
door. Unless you can fix the
neighbor's house, lower your
expectations or go on to the next
one.

Avoid Busy Streets

A house on a busy
street is going to sit
no matter if it is for
sale or rent,
because no one
wants to have to
get in and out of the driveway, listeni
to the road noise, or worry about
the kids or the pets getting run over.
You can rent and sell these, but be
sure to adjust your price
expectations downward.

Earn Up
To 7%
Rebate On
Purchases

Paying Draws
Be sure to pay
invoices in trackable
checks and be sure
to get a W-9 for
reporting to the IRS.
This way you have
all your bases covered in case of an
audit, but also if you have to prove
repairs to a lender. Be sure to pay
contractors based on a draw
schedule and make sure scheduled
work is complete before they get a
scheduled draw.

Get Permits
Yes, permits cost
time and money.
However when you
go to sell the project
you are often asked
if all the necessary
permits were obtained. Plus, should
an inspector just show up on your
job site to see permits and you don't
have them, you could be a thorn in
your side going forward, where if
you had been proactive and
obtained the permits, the inspector
might help you solve a few costly
problems in the future.

HomeDepotoffersupto5%
RebateQuarterlytoThose
RegisteredwithHomeDepot
ProRewards.
MAREIMemberscanregister
foranadditional2%
RebateBiAnnually

5%RebateVariesbasedontotalspendinayear.2%Rebatehasaminimumpurchaseof$3000in6monthperiod.
RE INVESTMENT NEWS

LEGISLATION

"SONOWIHAVETORENTTOFELONS?"
What the New HUD
Guidelines Actually
Say About Applicants
with Criminal Records
On April 4th, HUD released a statement
entitled Guidance on Application of Fair
Housing Standards to the Use of Criminal
Records by Providers of Housing and Real
Estate Related Transactions that set social
media sites afire with a lot of angry
speculation and half-truths regarding what
the statement actually means..

MAREI.ORG

But what does HUDs move mean, and what

does it actually require you to do?
First, this is NOT a new law. There has been no
action by congress or the courts; felons have not
been added to the list of protected classes. Its
a statement by the Federal-level policing agency
for fair housing law clarifying its intention to

By
Vena Jones-Cox
interpret and enforce the existing law
in a new way. So while no act of
Congress created this, you can assume
that HUD WILL prosecute cases based
on it.
Second, in order to understand why
HUD thinks that whether or not you
rent to felons is a discrimination issue
AT ALL, its important to understand
the Doctrine of Disparate Impact.
The original Fair Housing laws of the
late 60s more or less defined illegal
discrimination as an intentional, if not

overt, act. But as time passed, fair housing

thinking began to evolve to include the idea
that even completely unintentional acts, if the
effects of those acts served to limit the housing
choices of protected classes, could be
discriminatory, illegal, and punishable by law.

On the one hand, your rental houses are your

private property, and you should be able to
decide that, as a blanket policy, you dont want
criminals living there for your safety, the
safety of your property, and the safety of your
other tenants and neighbors.

For instance, landlords who created policies

that limited the number of people allowed in a
unitfor instance, I wont rent my 2 bedroom
apartment to more than 3 peoplewere
accused of discriminating against families with
children under the Doctrine of Disparate
Impact.

On the other hand, its unforgivably nave to

refuse to admit that America has systemic
problems that are nobodys fault and
everybodys faultbut which lead to a system
thats stacked against the poor and minorities.
And when this stacked system becomes an
impediment to finding a place to live, it
becomes HUDs concern.

See the logic? This policy would in no way

impact a couple with no children, but would
deny a couple with 2 children, or a single parent
with 3 or more children, access to an apartment
that could, theoretically, suit their needs for
space. Thus, it disparately impacted a
protected classfamilies with children.
The fact that the reason behind these policies
has to do with the economics of owning rentals
(more occupants use more utilities and do more
damage) does not stop them, under the
Doctrine of Disparate Impact, from being illegal.
While the idea that you can be prosecuted for
unknowingly and unintentionally discriminating
might seem dangerous and unfair, the Supreme
Court did uphold it in a 2015 decision, saying
that the Civil Rights Act does govern any and all
policies that create artificial, arbitrary, and
unnecessary barriers to housing based on
statistical disparities.
And its those statistical disparities that
connect policies against renting to felons to
discrimination. HUDs argument is that,
because people of color make up a much higher
percentage of the prison population than they
do of the general population, they are provably
more likely to be kept out of housing by such
policies than are whites.
So what we have here is one of those deeply
complex, messy, divisive issues that pits the
natural and constitutional rights of one group of
people against those of another.

These new guidelines are an attempt to use

HUDs policing powers to remedy a perceived
social injusticethe blanket denial of housing
to ALL people with a felony criminal record,
regardless of the details of that recordthat
impacts some categories of Americans more
than it does others.
And yes, the way in which the powers that be
are attempting to remedy this situation
further restricts your rights to control your
private property.

criminals are bad tenants. For instance, you

might have criteria like this:
No violent or drug-related felonies
No crimes against children
No felonies committed within the last 10
years, and no imprisonment for felonies
within the last 5 years
No crimes against landlords or rental
properties
No convictions or pleas to any crime
involving metal theft, vandalizing properties,
or otherwise damaging properties.
No arson convictions or pleas
And, as always, youll need to have these
policies in writing, update them as they
change, keep written records of how any
application rejections violated your policies,
and above all, they must be applied equally to
all applicants of all races, religions, disabilities,
familial statuses, and so on.
In other words, dont be what the folks whod
like to further impinge on your property
rights think you are. Dont use your crimerelated applicant policies to discriminate
against applicants because of their
membership in a protected class.

So while its not fair that you should,

personally, be burdened with having to right
the wrongs that other people perceive with
the world, you ARE the one with the ability to
deny housing, so of course the responsibility
to fix it falls upon you.
But the good news is, the new guidelines dont
say that you MUST rent to felons, nor do they
say that you cant take criminal history into
account.
. What they say is that a policy that bars ALL
felons, no matter what the nature of their
crime or when it was committed, might be
considered to be discriminatory.
You CAN have policies regarding renting to
felons that protect your property, your safety,
or the safety of you other tenants and
neighbors. What you cant do is have a nofelons policy based on generalizations like all

Vena Jones-Cox is a full-time real

estate entrepreneur, real estate
broker, and past president of the Ohio
Real Estate Investors Association and
National Real Estate Investors
Association. She publishes weekly
articles about real estate investing,
wholesaling, and the legal
environment at www.REGoddess.com

RE INVESTMENT NEWS

MAREI.ORG/CALENDAR

THE CALENDAR
FROM OTHER GROUPS >

WEB CLASS

REALEFLOW &
YOUR BUSINESS

WINVESTORS
Hosted by Brian & Michelle Winberry
Wednesday Mornings at 9 am
Lucky Brewgrill
5401 Johnson Drive, Mission

To be a successful investor you need to have systems and

tools. Join us Thursday May 19th as we explore all the systems
and tools plus discounts that Realeflow has to offer members
of MAREI. No cost for the webinar at 7:30 pm.

1ST SATURDAYS

Register online.

Hosted by Jim & Beth Kasper

1st Saturday of the Month
Networking Coffee
Denny's
9001 Shawnee Mission Pkwy, Mission

1ST TUESDAYS
Hosted by Crossroads Investment
Lending & JD Asbell
White Board Discussion
7759 Shawnee Mission Pkwy, OPKS

LANDLORD INC
OF KCK
Hosted by Dave Hankamer
3rd Tuesday of the Month
Lone Star Steak House
1501 Village West, Kansas City, KS

MEETING >

REHAB FLIPS WHAT THE TV

GURUS DON'T TELL YOU!
Join us Tuesday May 10th at 6 pm for networking
and get ready to take notes as we interview 3 of our
very best rehab investors. Our special guests
include Jim Kasper, J.D. Asbell and Donald Tucker.

As always members and first time guests can preregister for no charge. All others pay $25 at the
door or $15 online in advance.. We invite everyone
to join, it is only $99 annually.

We are takign questions through the MAREI

calendar until 2pm on Tuesday. So go to
MAREI..org to get registered and while you are
there submit your questions..

Coming next month - Profits with Vacation

Rentals.

memership
JOIN MAREI TODAY $99 Annually

NETWORK
CONNECT
Meet and discuss real
estate investments at our
Meetings, Training and other
Events just for the Real Estate
Investment Industry

LEARN
SHARE
Establish and Perfect your
investing techniques and
share your knowledge.

SAVE
PROTECT
Save with our money saving
discounts with industry
providers and help protect
our industry.

"WHEREAREALLTHEDEALSAT?"
Some of the best places
to find deals and
things to make the
deal find you!
#1 Listed Properties: if you are going to start
with listed properties, you are going to want to
work through a Realtor or I contend get your
own license and become your own Realtor.
For these listed properties you can find several
tools that will allow you to enter your

narrow your search to properties that

fit your criteria. For example only in
your area, with 3 or more bedrooms,
with at least 1 or 2 garages and with a
basement. You may want to limit to
under a specific price, although
personally if its in my area, I want to see
them all and if they seem like a good
search criteria and then have it email you every prospect I go look and make an offer.
property that comes on the market. This is a
The listing price is irrelevant.
great place to start if you are a brand new
investor, primarily because it gets a lot of housesWhat are you looking for in these
in front of you so you can learn your area, go
properties that get emailed to you?
look at houses and learn what is a deal.
Items that indicate a motivated seller.
However to get the best deal, you will want to

MAREI.ORG

By
Kim Tucker

First I look at pictures, is the yard a

mess? Does the roof look in bad shape? Is the

siding falling off or the paint peeling? Are there
boarded up or broken or ancient windows?
When we look at interior photos, is it cluttered?
Is every flat surface covered with stuff? Does
the kitchen need updating? Is there a lot of pink
or aqua blue green in the bathrooms? Is there a
lot of 80s brass? If the pictures say it needs
updated or remodeled or repaired it has
potential.
Is it obviously vacant? Then the seller already
moved out. Very big flashing indicator that this
could be a deal.
Is it beautiful, like the after photos on the home
renovation shows? Then this is probably an
investor fixed up house and will be your
competition once you remodel and list it for sale.
Second look at what the text says about the
property. Does it say anything like motivated
seller, bank owned property, handy man
special, fixer upper, estate house, etc? These
terms are all indications of motivation.
Sometimes the system you are using might allow
you to search for key word terms. By far the best
system to work with is the Realtors system
through the Multiple Listing Service, you can set
up searches for each of these key words.
But remember, if you are getting a property sent
to you via email, a whole bunch of other potential
buyers are getting the same email. So if it is a
deal, you have to act fast and bring your best
offer.
#2 Craigslist: Craigslist and other similar sites
where you can search for houses advertised for
sale by owner can be a great resource. However,
you might want to set up a system to deal with
the advertisements where you make a list of all
the houses available for sale AND for rent, and
send an email to them with some sort of brief
message that you buy houses and close quickly
and ask them to call you, email you back or
maybe submit on your website. Or you could
make a list of all the houses for sale and the
associated phone number and send a voice blast
or text blast for them to call you. The motivated
sellers will get in touch with you and you can then
go look at, build rapport, make an offer.

You could also check other classified sites, the

newspaper or the penny saver publications.
#3 Driving for Dollars is what they call it when
you drive around a neighborhood looking for
signs of houses for sale. However, its also a great
way to build a list of not only the houses listed for
sale or the houses with For Sale By Owner or For
Rent By Owner signs, but also of homes that are
vacant and / or in disrepair. Then depending on
your motivation to buy houses, you could go
knock on the doors and talk to people or look up
the owners name and address up and send them
a letter or postcard or in this day and age, see if
you can find them on Facebook or LinkedIn and
send them some messages. There is even an app,
where you could snap a photo of the house and
send a postcard to the owner, all from your
smart phone.
#4 Referrals from People You Know: This could
be one of your best resources because people
who the seller knows, tells them to call you or
you to call them, so they are a warm lead giving
you built in credibility. Be sure to cultivate
everyone you know to send you leads. Let them
know that you buy houses and how you work,
then when they come across a person who
needs to sell their home and do it quickly that
they should call you. This could be people you
know like friends and family, but dont forget
people you run into at the grocery store, or who
make your coffee at Starbucks, or clean your
teeth at the Dentist. Or you could also work to
create a group of people to refer to you like past
sellers, probate attorneys, Realtors and other
people who might be working with motivated
sellers.
#5 Other Investors: There is a whole category
of investor that is not buying to rehab and flip or
buying to hold, they are buying to sell to you.
They are called wholesalers and you want to be
sure to get your name on every wholesalers
email list so you can find out about their houses.
You will find these people as you start
networking at your local REIA and you will start
to see their marketing as you work on your own
marketing, and you might run into them at
houses. Be sure to get their card, go to their
website and get on their list.

That fairly well covers the list we started with,

but by no means has it found us more than
maybe 10% to 20% of the deals. So what then,
how do we find the other 80% to 90%? Well
you dont find them . . . you make them find you
. . . and you do it the good old fashioned way . . .
you market to them.
Top 5 Marketing Tools:
#1 Business Card: By far one of the cheapest
and best tools is your business card. Carry
them everywhere and find a reason to give one
to every person you meet:
#2 Web Site: The website does several things.
First it is a perfect first impression for buyers.
Second it lets you share your knowledge and
expertise. Third is is a place to capture
information . Last is is a place for sellers to
communicate with you.
#3 Direct Mail: This is one of the top ways to
market to specifically the type of motivated
seller that you want to target. You can buy or
build list of property owners that have soe sort
of immediate motivation to sell. Then send a
series of direct mail pieces to these sellers.
#4 Internet: This is going to be a broad range
of things to reach out to people from your
website, to social media campaigns to email
campaigns.
#5 Signs: You may have heard the song Signs,
Signs everywhere are Signs . . and that is just
what you need. These can range from
branding on clothing, to little bandit signs on
the side of the road, to banners in yards and
billboards. It's all in your budget and your plan.
Hopefully this has given you a few ideas to use
to go out and find deals.
See you at the next meeting, be sure to
connect with the other folks there, someone
just might have a deal for you.

RE INVESTMENT NEWS

DIRECTORY

BUSINESS
ASSOCIATES
Find out more about each of these associates by visiting
their website.
Or go to MAREI.org and click on Business Directory.

10

AZURE CARPET CLEANING

Carpet, Hardwoods & More
Jerry Myers & Tiffany Krout
www.AzureCarpetCleaning.com
816-668-0258

ACCURATE TITLE

BRIDGE MANAGEMENT

A Full Service Title Company

David Green
www.AccurateTitleCo.com
913-338-0100

A Turn Key Real Estate Experience

Nathan Brooks
www.BridgeEquity.com
913-695-8213

ALPHA TITLE

CONTINENTAL TITLE

Full Service Title Company

Patsy Archer
www.AlphaTitleLLC.net
913-498-8999

A Full Service TitleCompany

Sharon Bower
www.CTitle.com
913-338-3232

APIA

CROSSROADS INVESTMENT LENDING

Asset Protection Insurance Agency

Lindsay Griffin
www.APIAProtects.com
877-752-2742

Investor Lending
Britton Asbell and BarakTschirhart
www.KCLend.com
913-766-2900

AZURE WATERFRONT

DISCOVER HVAC

Luxury Waterfront Property Investment

Brad Reddick
www.AzureWaterfront.com
800-240-3606

Heating & Airconditioning

Complete System for $2785
www.DiscoverHVAC.net
816-500-2900

MAREI.ORG

DIRECTORY

GUARANTEED RATE
First Digital Mortgage
Beth Langston
www.GuaranteedRate/com/BethLangston
913-225-9323

HOME RENTAL SERVICES

Kansas City Property Management
Sandy Fisher or Paul Branton
www.Home4Rent.com
913-469-6633

LONGHORN III INVESTMENTS

Private Lending Partner
Lawrence Hopkins
www.LonghornInvestments.com
214-420-7329

MERCHANTS MORTGAGE
Real Estate Finance Company
Susan Aubin
www.MerchantsMtg.com
720-554-9480

INVESTORS CHOICE FUNDING

PRIDE PROPERTIES

The Flexible Funding Solution

L. Scott Ficinus
www.InvestorsChoiceFunding.com
816-668-7223

Real Estate Professionals

Marcus and Matt Bray
www.PrideProperties.com
913-213-5370

JAMIESON HOME TEAM

REAL PROTECT

Realtor & Property Management

Kevin Jamieson
www.KevinJamieson.ReeceNichols.com
913-384-8331

Insurance for Investors

Brought to you by National REIA
www.RealProtect.com
1-800-579-0652

KC INVEST
Investment Property Seller
Kim Tucker
www.KCInvest.com
913-735-0018

REALTY RESOURCE
Real Estate Brokerage
Scott Tucker
www.RealtyResourceKC.com
816-406-0701

KCMO HOME BUYER

Property Buyer
Don Tucker
www.kcmoHomeBuyer.com
816-200-2198

RE INVESTMENT NEWS

11

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