Real Estate Journal - Spring 2016 by National Real Estate Investors Association

Real Estate Journal

Spring 2016

3. Crowdfunding and Peer2Peer Lending: The Disruptors we Want! IRA-Owned LLCs Owning Gold – The Ultimate in Self-Direction or Disaster Waiting to Happen? 5. Bed Bugs... Here to Stay 6. Perseverance and Art of Giving Someone Another Opportunity to Say Yes 7. Three Areas of Concern for the US Economy

8. The Magic of Leverage – The Greatest Real Estate Advantage 10. Add Value With Quick and Easy Deck Upgrades Property Owners and Zika Virus 12. Tap Your Hidden Resources – Other People 13. How Wireless Security is Transforming the Real Estate Industry 17. Mama Didn't Raise No Fool

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Member Spotlight

Will HUD Make Criminal Background Checks a Criminal Case? By Charles Tassell, Chief Operating oﬃcer, National REIA

UD has finally come out

just an extension of HUD’s efforts with its statement on crim- to make criminals, especially felinal background checks. ons, a protected class. With arJust as we warned after the Dispa- guments similar to those used in rate Impact ruling last June, HUD Berkley, CA (Yes, that one!) to prowould start down the road of bu- vide criminals with protected class reaucratic over-reach. The “guid- status, HUD has developed a legal ance” offered on the proper use of theory, supported by a single fedcriminal background checks pub- eral appeals court and validated by hitney Nicely is a real lished on April 4th, 2016, is really the US Supreme Court, to require estate investor & auctioneer with Nicely Done Auctions, LLC. Her company specializes in representing investors with second homes, large tracts of land, horse farms, or unwanted commercial pieces of property. She’s an active member of the Knoxville Real Estate Investors Association (Knox REIA), in Knoxville, Tennessee, and recently began coaching people who are new hen it comes to turning a to real estate investing. property around, real esPlease tell us a little about tate investors know how what you did before getting to make it happen. Whether it’s flipping a once-dilapidated house into real estate investing: After graduating from back onto the tax rolls or rehabthe University of Tennessee bing a multifamily into a community asset, investors see the silver continued on page 15 lining that others often overlook. However, as any veteran-flipper will tell you, getting a property turned around can be a lot of work. Let’s say you’ve just purchased a three-bedroom ranch, sight unseen (other than a drive-by). The price started. However, when you open was right and you’re pretty sure the door you discover that Harry it’s going to be a quick flip with a the Hoarder has been living there fantastic ROI. You take possession the past fifteen years and all you see and head over to the property to get are piles of his stuff – reinforcing

Whitney Niceley

renters to sacrifice their safety, by limiting the considerations and restrictions landlords can place on potential tenants, specifically those with criminal backgrounds. The heart of the HUD argument stems from the idea that classism and the system are to blame continued on page

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the notion that one man’s trash is another man’s treasure. However in this case, it is just plain garbage and it needs to go. continued on page 18

Real Estate Journal

Real Estate Journal 路 Spring 2016

Real Estate Journal

Crowdfunding and Peer2Peer Lending: The Disruptors we want!

by Scott Whaley

people weren’t choosing crowdfunding and Peer-2-Peer lending over the alternatives of Wall Street and Big Banks this article would end right here. But it doesn’t. Crowdfunding and Peer2Peer lending are the future of the independent real estate industry for one very simple reason that Wall Street and Big Banks cannot fathom. It’s what people want. Here’s a quaint idea that I believed as a freshly minted college graduate and that some companies like Google or Uber deliver on a massive scale - the customer is King. Another way of looking at it is if people are flocking to the competition, then that means they don’t like what you have to offer in comparison to your offering. Beyond obvious, yes? This then begs the question, “What do people want”? When it comes to investing it’s been assumed for decades that people only want higher, safer returns and that’s it. For a while there, it was assumed to be irrelevant how these higher, safer returns are delivered, nor was anyone really asking “Is that really what we’re getting”? It’s when we begin to question this system that the bankers and Wall Street scratch their heads and stare at us as if we’re crazy, laugh, and walk off; they cannot comprehend why we’d be saying something like that. f

This was brought home to me in an experience I had taking the ridesharing company, “Lyft”. I wanted to test it to see what all the ruckus was about and when I did, it changed my life forever. I had never had been offered, nor taken anything more than, a ride home in a taxi cab. I assume this was another taxi cab. It wasn’t. It was a ride home, at two thirds of the price, in a clean, well-maintained minivan with a dental hygienist & young mother of two named Denise. We chatted. I learned about her and this new way of earning extra money for raising her kids and taking care of the family a few hours at a time. In that one ride my satisfaction level with Yellow Cabs service dropped about 95% and I haven’t taken another cab ride since. The thing is, it was more than a cab ride. It was not simply the one way delivery of a service to a customer. It was two-way. It was an interaction that made me feel like something more than “fare”. It was a ride home with another human being, who was willing to treat me as if I were a friend; we were both there to help one another, not just give to take. On top of that, the differences like speed of delivery and the personal knowledge I gained from her profile provided me with a connection that was unprecedented in the “cab

ride” scenario. I knew more about her as a person than I will ever know about any of the previous cab drivers I never knew nor will remember. When people became aware of Uber they compared that to Yellow Cab. Yellow Cab declared bankruptcy in San Francisco two months ago. Why? Not because they are bad at what they do. They went bankrupt because the new way of getting rides made the old way totally unacceptable, unpleasant and costly. I believe this is what we are experiencing in the real estate investing and funding industry. Crowdfunding and Peer-2Peer lending give people more of what they want. They want to be treated with respect. They want to be connected. They want the freedom to choose. They want to be knowledgeable. Intelligent. In charge. For this reason, people are rejecting being treated as if: all they care about is money, that they are helpless creatures, that they are devoid of the capacity to learn and that they lack sound judgment. That’s what the current model is telling us. Technology has opened up avenues of connection and options of communicating never before dreamed of. It is massively disruptive to established, commonly accepted beliefs, systems and structures that never

contemplated the possibility of the level and depth of interaction and communication available to each and every one of us at almost zero cost! The technology revolution has already dictated that to stay competitive we must change. We must deliver more of what people want. Much like Lyft has done with the rideshare industry, real estate borrowers and lenders are turning to Crowdfunding and Peer-2-Peer lending to deliver more of what people want. Does the current establishment understand and welcome it with open arms? Of course not. Wildly disruptive? Yes. A threat? Yes... to the old existing order and an exciting alternative for the end users. We, who can stand a little of the uncertainty that comes with the end of one age and the beginning of another are looking at an amazing opportunity. Discover all of the new technologies, strategies and ways of investing and getting funding with this new business model that has been sweeping through all industries. Now, it's our turn. For more information check out www.REIFA.org and and follow @REIFA_org on Twitter

IRA-Owned LLCs Owning Gold:

The Ultimate in Self-Direction or Disaster Waiting to Happen? By Jeffery S. Watson, Esq.

n multiple occasions I have

been asked to share my thoughts regarding self-directed IRAs establishing limited liability companies so that the account holder can use that LLC to purchase precious metals and store them in a safe in the account holder’s own dwelling. I recently heard one radio advertisement for a company promoting and advocating Real Estate Journal · Spring 2016

just such a thing, and the energetic sales voice even offered to waive the initial $500 setup fee if callers would quickly take action and dial the toll-free 800 number. When you consider investing your retirement dollars, specifically your IRA, it is wise to begin at the beginning. IRAs were established pursuant to 26 U.S.C. 408 which states in part, “For purposes of this section, the term ‘individual retirement account’ means a trust [emphasis added] created or organized in the United States for the exclusive benefit of an individual or his beneficiaries, but only if the written governing instrument creating the trust [emphasis added] meets the

following requirements….” The statute goes on to list a long litany of requirements. I believe the usage of the word “trust” twice in that opening sentence has some significance. By way of background, a trust requires the interaction of multiple parties and items: the Grantor/Settlor, the Trustee, the Beneficiaries, and most importantly, the trust Res or assets. If a person is both the Grantor and Trustee, and also the Beneficiary (holding assets for his or her own benefit), the trust is defective and invalid. More on this later. In 26 U.S.C. 408(m)(1), it states, “The acquisition [purchase] by an individual retirement account…of

any collectible shall be treated…as a distribution from such account in an amount equal to the cost to such account of such collectible.” The statute then goes on to define “collectible,” and in §(2)(C) and §(2)(D), the list includes “any metal or gem” and “any stamp or coin [emphasis added].” Exceptions for certain coins and bullion are given in §(3)(A) and §(3)(B) which state as follows: For purposes of this subsection, the term “collectible” shall not include – (A) any coin which is –

(i) a gold coin described in paragraph (7), (8), (9), or (10) continued on page 19 3

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Real Estate Journal · Spring 2016

Real Estate Journal

By Charles Tassell

Bed Bugs… Here To Stay

edbugs are never an exciting talking point, but they do draw a crowd…like a train wreck. Several recent studies have begun to layout a disconcerting pattern. A recent study from Fordham University highlighted the historicity of bedbugs, investigating fossilized bedbugs’ trail to our modern scourge. The Second study looked at the full genome of the Bedbug. In fact, the bedbug has 3 large clusters of its DNA strand which helps it adapt and overcome pesticides. While several pesticides like Temprid© and Transport© have shown an ability for immediate termination, with the additional benefit that area sprayed remains lethal to the pest for approximately

6 months, the Bedbug has shown an uncanny and unprecedented ability to protect its progeny by passing on resistance to pesticides. With over 36,985 genes, the bedbug is an intricate parasite that has adapted to feeding solely on human blood. Even its thickened skin, now provides it with increased protection from being squished as well better protecting from pesticides. As if those concerns were not enough in battling the horde of miniature vampires, two additional issues have serious implications for property owners in addressing the problem. The first is the settlement member of the suit. While the certifying class action status to so of a class action lawsuit that named suit was settled (for a little over many possible members over such every resident and visitor to a small $2.4 million), the implications of continued on page 19 complex in Iowa, as a potential

HUD Seeks to End Discrimination ...continued from page 1

for individuals having criminal records. HUD’s theory supports the idea that the only reason minorities have higher rates of incarceration is due to inequities in the American judicial system, therefore, HUD will work to rectify one aspect of such inequities by making housing for criminals much more accessible by banning the consideration of criminality. HUD’s flawed argument on “Discriminatory Effects Liability” makes the case that Safety, is neither a substantial nor a legitimate concern. In fact, according to HUD’s theory, until a property has residents raped, rapist shouldn’t be banned. Similarly, unless there have been murders at the property or community, murderers shouldn’t be banned. Even then, the housing provider must statistically prove that there will be a safer environment without these specific Real Estate Journal · Spring 2016

criminal backgrounds living there. Ironically, HUD recognizes that convicted drug manufacturers and distributors can be banned, because of specific federal language, only to make exceptions for those who use drugs, or are convicted of any other criminal act! The second theory that is very disturbing about HUD’s “guidance” is the complete abdication of the principle of equality ensconced in the 1964 Fair Housing Act, which is: treat everyone the same. Anyone who has participated in fair housing training knows that principle is the cornerstone to equitably addressing the public, and protecting one’s self from challenges to discrimination. It’s a concept that’s easy enough for a kindergartner: treat everyone alike. Yet, HUD’s new guidance turns that concept on its head, summed up in the conclusion with this, “…a

determination must be made on a case-by-case basis.” In so doing, HUD’s guidance contradicts the very law that enabled it. By setting in place a ban on sex-offenders, and pedophiles, a manager might have an effect of discriminating against a specific protected class via race, gender or national origin. Now you might not know that effect, or have HUD’s fantastic wherewithal to statistically prove that middleaged, white guys from the US are the most likely perpetrators of this kind of crime – but from HUD’s perspective it doesn’t matter! HUD’s statement: “a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified” (emphasis added). So the only crime that could be considered to be banned is one in

which the local, regional, state, and federal criminal population and general population are completely statistically consistent. No such situation can occur. A final point for now is the banning of arrests from rental consideration. While this may seem legitimate, it places housing providers in a very awkward position, as many municipalities have laws and regulations on the books regarding drug users, and justify eviction for drug-related arrests. HUD states, “As the Supreme Court has recognized, “[t]he mere fact that a man has been arrested has very little, if any, probative value in showing that he has engaged in any misconduct. An arrest shows nothing more than that someone probably suspected the person apprehended of an offense.” While this harkens back to a better understanding of “innocent until proven guilty,” until this quandary is resolved, housing providers will face aggressive city enforcement on one side, and assertive housing advocates on the other. National REIA suggests working with your local housing advocates to address this concerns with municipalities. While National REIA will be working with similarly interested national organizations for change, it must be made clear to all elected officials that no one should discriminate. However, trying to fix the justice system by placing renters and their neighbors at risk is just plain wrong.

Real Estate Journal

Perseverance and the Art of Giving Someone Another Opportunity to Say Yes By Alex Goldfayn

“Many of life’s failures are people who did not realize how close they were to success when they gave up.” Thomas Edison said that. And he’s a man who knew a thing or two about failure. This is one of my favorite quotes in the world. Because all of us can think of times in our lives when we’d had enough, when we were ready to quit, but we didn’t. We tried again. Just one more time. And it was enough. As Edison said, that one extra effort is often the difference between success and failure. Recently, my new book, The Revenue Growth Habit, was selected as the sales book of the year for 2015 by the business retailer 800-CEO-Read. Also, Forbes selected it as one of the top business books of the year. This makes me particularly happy because the publishing industry rejected my book more than 50 times, over years, before I found it a home with the excellent publisher John Wiley & Sons. In fact, Wiley itself rejected my book twice before it finally bought it. Even the editor who eventually bought it had said no before I called him again, against my own agent’s advice, and sold him the book. Here’s the thing for those of us working on revenue growth: No never really means no. It simply means not at this moment. So we must give people another moment to say yes. If the buyer isn’t buying, don’t quit on him. Try again. Then again. And again. The beauty of our work is that we only really need one yes! The number of rejections don’t matter, because we only need one yes. In fact, one of the revenue growth techniques I’ve been teaching a lot lately focuses on going back to everyone who told you no in the last year, and restarting the conversation. “Listen, Tom, I know we tried to connect on this last year, but here we are in 2016 – should we revisit that conversation?” Another powerful revenue growth technique is to follow 6

up on quotes and proposals. The customer asked you to write up a quote. You dropped what you were doing and did it. The customer doesn’t respond. (Silence!) I teach a simple three-email follow-up technique that closes 20% of these quotes and proposals that you don’t hear back about. What are we talking about here? We’re systematizing and formalizing perseverance. I’m teaching clients’ staffs to simply try again. This is how complicated revenue growth is! Last April I was speaking at a convention and one of the other speakers was the legendary psychologist and author, Martin Seligman. He is one of early researchers in behavioral psychology, and universally credited as the founder of the field of positive psychology. I studied him in college, and I was amazed that he was standing here, on the same stage I was also presenting on. During his speech, he said something I will always remember: His research has found that perseverance and resilience are twice as important to success as talent is. That is, perseverance and resilience are two-thirds of the equation to success, and talent is just one-third. Think about the power of this. Last year, we moved homes. In the backyard of the old house were two maple trees my wife and I planted when my children were born. These were important trees to us, deeply meaningful, and we wanted to bring them with us to the new house. Turns out, when you’re moving established trees, you can’t just have people dig it up with some shovels. You need what they call a hydraulic tree spade to do the work. This is a huge piece of machinery, mounted on a flatbed truck the size and weight of a cement mixer. In the Chicago area, where I live, there are maybe a dozen of these companies.

Alex Goldfayn will be the featured speaker at National REIA’s 2016 MidYear Leadership Conference, on June 16-19, in Atlanta, GA. He is the CEO of The Evangelist Marketing Institute, LLC, a revenue growth consultancy. He is the author of the 2015 sales book of the year, The Revenue Growth Habit: The Simple Art of Growing Your Business By 15 Percent in 15 Minutes A Day. For more information about NREIA's 2016 MidYear Conference, please visit www.NREIA.org I called them all, and they all told me no. They didn’t want to do a little back yard project. These people do golf courses and parking lots and office complexes. One guy agreed but emailed me the night before the work was to be done and canceled. The closing on the old house was now days away, and I had spent six weeks looking for a company to help us with the trees with no luck. My wife told me to give it up and buy a couple new trees (we could have planted a forest for what this service costs!). My parents told me to give it up, and even these tree people told me to just buy some new trees. The wouldn’t work for me. I wanted these trees. So I started calling companies in Wisconsin. It took another dozen calls to find somebody to do it. We got the trees moved. They’re in the front yard now, closest to the sidewalk and the street, for everyone passing by to enjoy. After the trees were moved, my wife said to me, “I don’t know

anybody else who would have persevered like this to get these trees here.” Revenue growth is the same we. Anything worth having is the same way. People will always tell us no. We must simply give them – or someone else – another opportunity to say yes. Try again. Then again. We only need one yes. Keep trying until you get the yes. And you will get the yes.

Real Estate Journal · Spring 2016

Real Estate Journal

Three Areas of Concern for the US Economy By Chris Kuehl

Velocity of Money Still Taking a Dive

The Velocity of Money is directly tied to overall economic health and momentum. When financial funds (either electronic transactions or physical currency) are changing hands rapidly, the economy is typically growing. The faster the turn, the faster the growth We look at the M2 supply and velocity of money to see what’s happening in one of the broadest measures of money and economic momentum. It’s still odd that we haven’t seen any positive blips in the velocity of M2 since the fourth quarter of 2009 and early in 2010. Since then, it’s been a sled ride to “you know where”. It’s still sitting at 56 year lows (which is the length of time that we have data for). Some people have argued that times are just different and the treatment of money is different. But, if that’s the case, then something dramatic has happened since just 2008. What is it? The Fed perhaps? Flushing the US economy with liquidity is the only thing that could have caused this massive a ripple in the 56 year trend – because its really the only thing that is considered “unprecedented” (regarding money since 2008) and the only trend large enough to have this impact on the entire monetary system. The bottom line is that money is still not moving, hence this perpetual 2.4-2.6% annualized GDP rates.

Real Estate Journal · Spring 2016

Poverty Measures Worsening most help last year was North have no means by which to escape Several years ago the Salvation Army developed the Human Needs Index as a way to measure whether there was progress towards alleviating poverty and deprivation in the US. The Index had been improving in the last few years but the latest version is down. It reached its highest point in 2012 when it hit 3.00 but then dropped to 1.97 in 2014 before reaching 2.28 last year. The lower the number the better. The Index is based on seven measures that revolve around the services that are offered by the organization. The state that has required the

Dakota. Kansas was seventh on the list – ahead of Michigan and the District of Columbia in terms of need. The issue of poverty is perhaps one of the most vexing and emotional of all the economic discussions. The fact that the richest nation on the planet still has millions of people in poverty provokes some to express deep shame and disgust and others tend to assert that those in poverty in a country as rich as this one have obviously not made very good choices. As with most issues the truth of the situation lies somewhere in the middle. The Salvation Army is far from the only organization or agency that tries to determine whether the problem is getting worse or better. The different studies draw different conclusions. Most of the groups that deal with poverty offer four broad groups and point out that dealing with each requires different approaches. There are those who have alcohol and drug issues and those who have mental issues that preclude them from being able to cope effectively. These are very long term problems. Then there are those who are victims of radically changed circumstances – a divorce, medical crisis, loss of a job in a region with lots of job loss and even natural disasters. These are generally shorter-term situations. The third most common is the children of those in poverty as they

and finally there are those who are culturally challenged to one degree or another – the ones who fight language and cultural barriers. US Weather Change Could Increase Tornado Activity. There is a significant change in the national weather pattern. Arctic cold blasts are receding and being replaced by hot, humid temperatures. That, coupled with a favorable pattern of sheer from the southwest, could produce a greater chance of strong tornadoes in May. There are no guarantees, but the region between Texas, Oklahoma, Arkansas, and Louisiana are likely destined for continuous waves of severe storms. What might be interesting about this is that we could see a change in raw material demand. Right now, construction activity is starting to pick up in many markets around the country and if we have any significant storm emergencies (storm related), it could lead to a rush for significant construction materials. It’s just something to watch. This may seem insignificant, but the recent rash of tennis and softball sized hail in Texas and Oklahoma has caused millions of dollars of damage to personal property. And, this is just the start of the severe weather season.

Real Estate Journal

The Magic of Leverage The Greatest Real Estate Advantage

By Fredrick Carroll

nvestopedia defines leverage as the use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. In our industry we often refer to it as “other people’s money” or “OPM”. If used properly, leverage will significantly enhance your return on investment. This is easy to do if you invest in income-producing real estate but much more difficult, if not impossible, if you’re investing in stocks or mutual funds. Ignoring the fact that stocks, mutual funds, bonds and other

investments are in turmoil at the moment, real estate has nearly always been the best use of investment dollars specifically because of the leverage capacity. Let’s say you have $100,000 to invest. If you invest it in stocks, bonds, or mutual funds, you can only buy a $100,000 stake as a shareholder. However, if you invest that same amount in rental property – a higher end single family rental, duplex, or in some areas even a quad - you can leverage that same $100,000 into a much higher valued asset. You can

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purchase a $300,000 an incomeproducing rental property, use only $100,000 of your own money and the bank – or even better a private lender - lends you another $200,000 at a fixed interest rate amortized over time. You may even be able to spread it over 25 or 30 years. You have positive leverage when the interest rate on your mortgage is lower than the overall return on the property. Compare this to investments in the stock market. It doesn’t even compare! Let me give you a personal example. I have a $300,000 property generating a net cash flow of $25,800 each year without any debt financing on the project. That’s an 8 percent cash-oncash return on your investment ($25,800 / $300,000 = .086 or 8.6 percent). Now say you invest your $100,000 and borrow $200,000 at 4.5 percent interest, amortized over 30 years. The monthly mortgage payment is $1,013.37 per month or $12,160.44 per year. Deducting the annual mortgage payment from the net cash flow of $25,800 gives you $13,639.56 in net cash flow. That increases your return from 8.6 percent to 13.6 percent ($13639.56 / $100,000 = .1363 or 13.6 percent). By using leverage your annual cash-on-cash return increases by 58 percent (13.6 – 8.6 = 5 / 8.6 = .5813 or 58 percent). Isn’t that amazing?! This is the magic of leverage. Today lenders, via their selfdirected IRAs or just private money (and even banks) consider real estate a relatively safe option. In fact, compared to the stock & bond market real estate is not only safer but actually more profitable. Several years ago, I attempted to get a loan using my stock portfolio as collateral. I had a portfolio of blue chip stocks and thought I could borrow money at a low rate of interest and use the money to buy more rental real estate. I didn’t

get very far at all. Although I had previously taken a loan against my own IRA short term and had paid it back early this bank would lend less than half the value of my portfolio. Worse yet, the interest rate was astronomical at the time, almost double their published interest rate! This is when I found the concept of self-directed IRAs and haven’t looked back sense. However, even conventional financing makes sense with this simple, yet powerful use of leverage. Think about that $100,000 investment in our current economy. At best you may earn 6.0 percent in the market or less than 2 percent in cd’s or money market accounts. At 5% over 10 years will return $162,889.46 while that same investment earning 13.6 percent over 10 years will return $357,917.81. That’s a 120 percent increase in value over only 10 years! There are, however, a few things to keep in mind as you use leverage to invest. We just came through an era when investors got “OPM happy” and totally overdid the use of leverage. Make sure you take into consideration that we are potentially near a peak in the rental market. Estimate your potential rental income below what going rate is currently. Make sure you figure in possible vacancies over time to your budget. Remember, you have to pay the money back on time to keep your credit rating up and a couple vacancies are inevitable. When you calculate your loan to value (LTV), be conservative. I suggest no more than 70% LTV in any economy but in a heated one you may want to be even more careful. Choose a high quality property in a good neighborhood. If you were investing with cash you continued on page 23 Real Estate Journal · Spring 2016

Real Estate Journal

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Real Estate Journal

Add Value With Quick and Easy Deck Upgrades By Geoff Case, The Home Depot

here are many renovations or

additions you can make to a home to increase its value. There is a growing love for outdoor spaces like decks and patios, according to the American Institute of Architects. These spaces are an excellent investment, as they establish or increase outdoor living area at a minimal cost per square foot. The national average for construction costs of a wood deck is less than $35 per square foot, according to the National Association of Home Builders. On average, adding a wooden deck equals an 81 percent return on investment when selling a home, according to USNews.com. If and when a home or property already has deck, look for smart and efficient ways to enhance or upgrade. Decking projects range from simple upgrades like lighting or resurfacing to more advanced jobs like installing new railing systems or swapping out deck boards.

Composite

This material is becoming more popular in the decking arena because it requires little maintenance and looks like real wood. Composite decking is made from a mixture of wood and plastic, which makes it both durable easy to maintain. The material doesn’t splinter or rot, and it doesn’t need to sealed or stained. One example is Veranda’s ArmorGuard decking, which is backed by a 20-year warranty including protection against color fade and stain.

Natural Wood

The beautiful appearance on this wood makes it a top choice for decks, although natural woods can cost the same as composite and come with more work. Natural wood needs to be regularly weatherproofed and stained to keep their appearance. Types of popular natural wood include redwood, ipe, which is a Brazilian hardwood, tigerwood, which has a

This wood is affordable and durable. Another option growing in popularity is color-infused wood, which comes in a variety of different color options that don’t fade like or stains or finishes.

Decking enhancements

If a deck or patio doesn’t need to be completely renovated, small changes in appearance or creative add-ons can create an outdoor space worth spending time and entertaining in.

Resurfacing

Revive the deck by first giving it a good cleaning, then apply BEHR DeckOver. This resurfacing product is durable, mildewresistant finish that is made to last without cracking or pealing.

Lighting

Add to the ambiance of the outdoors by incorporating lighting Decking materials rich color with stripes, and cedar, in the patio or deck. Low-voltage Whether you are looking to which is rot resistant. LED lights continue to grow in install a deck from scratch, repair popularity, especially since they an old deck or update for a change Pressure-Treated Wood use 80 percent less energy. These in appearance, decking material If wanting to stick to a tighter are a great option for decks as they options are the most important budget, pressure-treated lumber can light a path from a patio to the decision to make. is a great product to consider. home when installed in walkways,

Railing systems

Create an open feel to the deck by installing cable-railing systems. The benefits of this new trend include better sight lines with thin cables, durability that can withstand most weather conditions and minimal maintenance. For a more traditional deck-railing look, consider installing pre-built railing systems or sections. This will save you both time and money. Making major or minor updates to a property’s deck is a great way to make the property more desirable to potential buyers or renters. Although prices of renovating a deck vary on factors like locations, size and materials, what you add it is still a cost effective alternative to adding on a room in terms of return on investment.

Property Owners and Zika Virus

he Zika virus has been growing in coverage across the US. To date, the CDC is not reporting locally contracted infections. In other words, only those who have travelled recently to known areas of infection have been diagnosed. Due to the mild flulike conditions of Zika in healthy

steps and post caps, adding to the atmosphere and safety of the outdoor area. Solar-powered landscape lights are also a nice option to add energy efficiency to the home’s deck while avoiding the hassle of wires.

adults, it is considered very likely that it is being under-reported. Which means the virus could be spreading across the country, with little recognition of the fact by authorities. The Zika virus is transmitted by a type of the Aedes mosquito. While this mosquito is more

prevalent in the southern half of the US, it’s not ruled out entirely for the northern regions. So what can you do? More than any other year, be sure your properties are not holding standing water. Or, utilize approved larvicides. Additionally, minimize personal exposure to

mosquitos by utilizing full cover clothing and minimizing outdoor activity at dawn and dusk. For more information please visit go www.cdc.gov/zika.

Real Estate Journal · Spring 2016

Real Estate Journal

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Sign up today at HomeDepot.com/ProLoyalty and enter agreement code NREIA or call 888-333-3551 *Accounts must be registered/enrolled through the website above to receive rebate credit. Registration instructions to follow. **Rebate payments follows outlined in enrollment guide. $1000 will be paid with The Home Depot Gift Cards. *** - gift cards are provided to participants by NREIA not Home Depot **Exclusions Apply. We reserve the right to limit quantities to the amount reasonable for our regular customers. In the event of an error, we will make every reasonable effort to accommodate our customers. Details on any product warranty available at store. See contract for guarantee details. ©2015 Homer TLC, Inc. All rights reserved.

Real Estate Journal · Spring 2016

Real Estate Journal

Tap Your Hidden Resources Other People

By Rebecca McLean, Executive Director, National REIA

ther people are the key to

your success. It is other people who link us with still more people – those who know of prime properties, new directions, money, business leads, ideas, hot tips. Just as important, other people encourage you when you’re on a roll and support you when the going gets rough. We call it networking, and it should be part of your job description, no matter your field…even real estate. Successful people network constantly, seeking help from a myriad of sources – and giving help back – from their first deals to the top of the industry – because they need to be able to pick up the phone, call the right person, and get things done. Networking is what NREIA is all about. The Real Estate Journal focuses on the “how’s” and “whys”. You can see investor success stories in the Real Estate Journal and get detailed how to’s there and at www.nationalreiau.com. As real estate investors we network all the time - at REIA meetings, in coffee shops, on the National REIA Cruise, at burger joints and

if you are a leader at MidYear and Chapter Conferences. REIAs are a support network and the leadership and members establish this network to offer practical help. Equally important, members contribute ideas to other’s dreams, building on them, and offering support. We need each other to fuel our dreams. In the end it’s passion that drives profits. As we approach spring it is time for new beginnings. It’s a great season for a “time out”

from the life that occupies us daily: the opportunity to consider if anything were possible, what would you do with your life? And then the chance to garner support from your peers and brainstorm on how to make your dream real – including how to finance it. Events like REIFAcon, coming up April 28-31st will help you learn how to use alternative funding for your businesses. Regular REIA meetings, or subgroup meetings, are a way to connect with fellow

investors and use their experience and know how in order to help you grow. To make our network even more connected National REIA has launched several new communication tools. Visit us online to stay updated on industry trends, legislative issues, and hot topics at www. rea lestateinvesting today.com. Keep an eye out for the quarterly Real Estate Journal in your mailbox. The National REIA Now is published in your local REIA’s in their newsletters and is also available online. In the past it was said that “information is power” but now that we are all swimming in information the new truth is that People are Power, connection with people to be specific. If you want to be successful in the real estate industry then REIAs are your connection to the power source!

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For More Information, Please Visit Us at www.REIAResources.com 12

Real Estate Journal · Spring 2016

Real Estate Journal

How Wireless Security is Transforming the Real Estate Industry

he real estate industry has long been faced with a problem: "You can't be everywhere at once." It feels impossible to monitor your property and staff, without forgoing your other tasks. But now, with new wireless technology there is finally a solution. A professionally monitored wireless security system gives real estate professionals essential insights into their units. More and more real estate professionals are using wireless alarm systems, to protect vacant homes, keep an eye on their staff, prevent water damage and provide extra value to their tenants.

for a landline phone usually made this a non-starter for a vacant property. With a professionally monitored wireless security system at the property, you can keep this worry at bay. When your property is monitored, if you ever have a break-in, the police will be on their way immediately. The siren will sound, and the would-be-burglars won't have time to steal from you. And when you’re selling the property, a security system is an easy way of letting realtors in and out. You can set up a specific PIN for them, and you’ll be able to see when they come, and how long they stay! With a home security system, Keep an Eye on Vacant you'll know that the property is Properties: protected by more than just a lock When you’re not around, what’s box and a lock. happening to your properties? You hope that the answer is “Nothing”, Know when your maintebut you worry. What if someone nance staff comes and goes: has broken into your home? With an alarm system, you can Between squatters and copper create custom PINs that will let thieves, there are many reasons you know when contractors enter to be concerned. Copper theft can and exit. Many of the property cause tens of thousands of dollars managers we spoke with told us in damage. In the old days, a that they use this feature to make wired security system was the only sure work that needs to get done option, but the contract and need gets done. Know who has come

and gone from what apartment or home easily. You can make sure that your maintenance needs are addressed, that your staff is doing its diligence, and just in case, you have a record of it all! If you and your renters agree, you can also set up a specific maintenance PIN. The maintenance PIN can be added for all units and will not be able to be seen by the tenants. Consequently, you can use the same number for each property, without security risk, by adding a maintenance PIN.

Stay on top of your pipes and plumbing:

New wireless security systems, let you monitor the environment in your properties. Worried about freezing pipes? No need with a freeze sensor. You’ll be able to access the temperature at the property remotely, you never need to stress, or get in your car and drive down to check the property out. Assurance at your fingertips. And it’s not just the freezing pipes that a security system helps you combat. Never worry about

whether or not the pipes burst, or if a washing machine is leaking. To the average apartment, water can cause $11,000 or more worth of damage. Water damage is expensive and time consuming to repair, but water sensors let you know as soon as they detect even a small amount of water. This way you can prevent any damage from happening and move on with your day.

Provide Extra Value to Tenants:

With wireless security systems, once you buy your system, they belong to you. Therefore, you can do anything you’d like with them. This includes providing systems to your tenants. It's easy to transfer ownership. Alternatively, many property owners and landlords rent the security system as part of the apartment. You can either have the tenant subscribe to the monitoring service, or you can take care of this for them! Your tenants will love the extra security that comes with your homes!

Simple Home Security for Real Estate Owners SimpliSafe is wireless, portable and easy to use—with no long-term contracts! Every year, more than two million homes are broken into. But for decades, home security companies have ignored the needs of real estate investors. With hardwired systems that can’t be moved—and long-term contracts that can’t be paused or cancelled—it was nearly impossible for you to secure your property and protect yourself from thousands of dollars in burglary, copper theft and damages. Whether you develop, manage, rent, or sell properties, there’s ﬁnally a way to keep your investments safe. SimpliSafe Home Security is wireless. It’s easy to move. We monitor your properties around-theclock—and never lock you in a long-term contract. 24/7 professional monitoring is just $14.99/month.

Real Estate Journal · Spring 2016

SimpliSafe.com/re-journal 13

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- Credit with Score - Preliminary Criminal - Address History

- Full Criminal History - Eviction Search - Government Watch List - Sex Offender Records

- Welcome Letters - CRA Forms - Disclosures - Adverse Action Letters - Online Lease Agreements

Real Estate Journal 路 Spring 2016

Real Estate Journal

Member Spotlight ...continued from page 1 (Knoxville) with a degree in communications, I went to work selling dump trucks at an enterprise that’s been in my family since 1939. In fact, I am the fourth generation to have worked there. At first I worked in the day-to-day operations of the company but soon transitioned over to selling equipment. It turned out that the men who were buying our old, worn out trucks really enjoyed talking to a pretty, young and intelligent woman. Those guys bought any equipment I had for sale; tractors, yellow iron, trucks and machine attachments. It was a wild and fun five years but once I started investing in real estate, there was no way I could stay in the trucking world. It was time to spread my wings!

Where is your current market and what is your focus or area of expertise?

I live in Knoxville, TN and most of my properties are within 30 miles of my home. I have several investment companies that collectively consist of 12 single-families, 19 apartment units, and several random pieces of undeveloped land strewn across east Tennessee. You could say that I like to collect land. In addition, I absolutely adore owner-financed and lease option deals.

Tell us about your first deal:

My first house deal continues to be a lesson in patience. My brother, Tyler, and I found a house on Craigslist that was close to our homes. It was For Sale By Owner, and we were dying to start building a real estate portfolio. Through negotiations with the heirs, we bought a four-bedroom two-bath house in the city of Knoxville for $25,000. At closing we found out that we offered more than any other investor. Uh oh…We were sure $25k was a safe bet to invest in this property but later found out we were foolish in our repair estimates. The house didn’t have central heating/air, the electrical didn’t have grounds and the foundation was not only cracked but also sinking! The plumbing hadn’t been used in a number of years and the city mandated that we update it to code. In the end, we laid a new foundation (on three sides), put in new wiring, new plumbing (from the street to the faucets), new windows, replaced old termite damage in the basement and refinished the original hardwood floors. Then we put in a new kitchen and bathroom shower. We finished the project as I completed ownerfinancing training and I showed my brother the quickest way to get our money back. When it’s all said and done, the house will clear about $50k above our investment on a long-term capital gain when the tenant buyers obtain their mortgage in June. It hasn’t been pretty, and it isn’t over yet, but we are better for the experience.

How do you fund your investments?

I use Craigslist, bandit signs, yellow letters and am very vocal about my projects on social media. People have started calling me Whitney Buys It all started back in 2009 when I flipped a house with my parents. Houses. I think it's great because I'm obviously in their brain as a house However, throughout the process, I began to realize that I adored the buyer. When I buy a house, I construct an owner-financing situation. I house, so I ended up moving in when it was completed. In 2011, I attended let the seller carry back a mortgage or lien with a free and clear house. real estate school and later found out that I was a terrible listing agent If the seller owes money on the house, I "wrap" another mortgage or and a completely lousy buyers’ agent. So I started buying the houses structure a lease option on the property. Then I use private money to flip myself, flipping them and then renting them for long-term income. In the property. I am a creative financing whiz. Rarely will ever use my own 2013, I learned that the secret to buying houses was in owner financing cash to buy, rehab and turn a property. Other People's Money (OPM) is and lease options. king of my world!

How did you get started?

Describe a typical work week for you as a real estate investor:

continued on page 21

If you aren’t looking at ten properties a week and making ten offers, your pipeline will not stay full. On TV it takes about 30 minutes to find, fund, and flip a property...In the real world, it takes constant activity. My typical work-week looks like this; On any given day I am returning emails, checking bank statements, sending out direct-mailings, visiting/ reviewing potential properties, coaching new investors, talking to potentials sellers, and of course, answering phone calls from tenants. Somewhere along the line I carve out time to research properties and make offers. And, depending on the week, I might be managing construction crews and attending REIA meetings.

How long have you been investing in real estate?

I bought my first property at an absolute auction in December 2012. The auction contained 90+ properties that a local bank wanted to unload before the new year. I attended the Saturday sale not intending on buying anything and had not researched any of the properties, but as I watched that morning, “good” tracts of land were selling for $500-2,000 dollars. So, like a novice, I raised my hand on the next lot for sale and all I know after that is the gavel went down on $1,000 and the auctioneer said I had won the lot. The item description said the property was 1.07 acres in Decatur, TN – I wasn’t even sure where that was. Later I learned that the previous owner (who was foreclosed on) had paid $69k for it. Real Estate Journal · Spring 2016

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Real Estate Journal

Mama Didn’t Raise No Fool

M. Jane Garvey, President, Chicago Creative Investors Association

n the process of landlording

many of us put ourselves at risk in ways we wouldn't think of doing in any other aspect of our lives. And we often do it without even thinking about what we are doing. To illustrate this let me ask you a few questions. If a total stranger called you and asked you to meet him at an unoccupied property, alone, after dark, would you do it, or would you say "My mama didn't raise no fool!"! Okay, if the same stranger called from a rental ad you were running online would you go meet them alone at an unoccupied property? Many of you will have to answer "yes" to this seemingly ridiculous question, because you've done it. And many of you have sent your spouse, or children to meet this stranger. Is this a necessary business risk, or are you a fool? Would you get all spruced up, go alone to a vacant property, unlock all the doors, put a sign in the yard telling everyone that passes by that you are there and they should come in, and even do a bunch of marketing telling the public that they should stop by and visit you? Have you ever held an open house? Would you casually go to a bank and withdraw $1,000 or more in cash and let other people know you were carrying it around? Would you collect the first month's rent and security deposit in cash, in person, at a property? Do you regularly collect rents in person? Do you let tenants pay you in cash at your office? Do you do rehab work that involves climbing on ladders, strenuous labor, heavy lifting, or use of power tools? Do you work alone? Do you have a phone with you to call for help if you need it and are able to use the phone? Do you deliver eviction notices by yourself, all alone? Why do we take these kinds of risks? Do we do it once out of necessity, and then gradually develop an attitude that nothing will happen to us? Or is it just a necessary part of the business? Over the years we have heard about landlords being raped, mugged, beaten, robbed at gunpoint and even killed. Some of these crimes may have been preventable with slightly different business practices. The fact is that you do need to deal with people if you are going to be a landlord. Some of these people are going to be strangers, and some of them are going to be adversaries. You are often going to be dealing with people who are, or perceive Real Estate Journal · Spring 2016

themselves to be, poorer than you. You are going to be working on, or showing vacant property at some point in your career. Some of you will be dealing with properties in poor areas. Some of you will be victims of crime. The solution is to minimize your exposure as much as possible, without getting out of the business. Avoid high risk situations, or hire someone to take the risk. As a normal course of business, take precautions that will allow your friends, family, or the police to come to your assistance if needed.

When meeting strangers at vacant property, don't go alone. Take a friend, coworker, employee, or family member, if possible. At the very least take your phone, tell someone where you have gone, who you are meeting, and arrange with them to check on you at a prearranged time. Find out as much as possible about the strangers you will be meeting before you go. Pre-screening will save you the drive for unqualified lookers. Not every potential tenant will be cooperative, but do you really want those that aren't?

Arrange to meet several qualified candidates at the same time. Criminals are less likely to try things when there are lots of people around. Besides the safety benefits this is good marketing. Your property will look like a hot commodity, and interested parties will be less likely to procrastinate. If you hold open houses at property you are trying to sell or lease, arrange for a friend to join you. We find that open houses are a useful marketing tool, but you are taking unnecessary risks if you man them alone.

continued on page 23

Strengthening Our Foundation

Think Big Solutions. Think Big Results. Rentals.com is always creating ways to enhance our customer’s experience, and ultimately deliver more leads. Stay ahead of the game by posting your listings on our sites to gain maximum exposure to renters. Online or on the go with our mobile app–we’re taking the burden off your shoulders with the Rentals.com Family of Sites. From a website redesign to increased SEO efforts, we’re doing everything we can to strengthen our foundation and bring you qualified renters. ©2015 RentPath, Inc. All rights reserved.

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Real Estate Journal

Quick Cleanouts ...continued from page 1 The same scenario could play out with established landlords as well. You might have had a tenant move out in the middle of the night or you’ve had to go through the eviction process to remove someone, chances are they didn’t leave the unit in the best of conditions. In fact, what they left is probably something that isn’t of any value or worth salvaging. You might also wonder why the area around your property seems to be a magnet for dumping unwanted

objects and garbage – which over time has gotten out of control. As any investor knows, time is money. The more time you have to spend cleaning up this mess – whether it’s coordinating others or doing it yourself – directly eats

into your bottom line. This is one hassle you simply don’t have time to deal with. That’s why National REIA has partnered with renowned debris removers 1-800-GOTJUNK?. They are the full-service professionals when it comes to junk removal. They handle the tough stuff from old furniture, appliances, electronics, tires, construction debris, even yard waste. They will take away almost any material that can fit in their trucks (without you ever lifting a finger) and they won’t leave a dent or a speck of garbage behind. Your membership in your local REIA (through affiliation with National REIA) will garner you a 10% discount on 1-880-GOTJUNK?’s services. Just use promo code “REIA” when ordering the service (verification may be required). As any savvy investor will tell you, saving here and there adds up over time as greater profits for your business and a higher ROI on your projects. How does it work? You simply go to their website (or call 800-4685865), enter your zip code, then follow the prompts to schedule your pick up. First you’ll see five days worth of available dates & times displayed in a convenient

dropdown menu. After you make your selection, you’ll be asked for additional information including payment details. It is at that point where you’ll enter your discount code. There is even a handy price estimator that allows you to get an idea about what the total service will cost.

drums/tanks, and junk vehicles. Keep in mind that it’s always best to check their website for the most up-to-date listing if items they will and will not take. 1-800-GOT-JUNK? has even saved over 2 billion pounds of junk from landfills by donating and recycling 61.3% of what they remove. That’s impressive.

What items will they take? For starters, they will take old mattresses as well as couches/sofas, furniture, tires, wood, construction materials, renovation refuse, yard waste (including branches), appliances (including refrigerators, washer & dryers etc), roofing items, and many other items. Now, the important thing to know is what they won’t take. Those items include asbestos, paint, chemicals, solvents, oil, oil

The partnership between 1-800-GOT-JUNK? and National REIA will be one that truly benefits your bottom line. Their allinclusive service, up-front pricing and convenient scheduling will help keep your projects on time and on budget – allowing you to focus on not only completing this project but getting ready for the next one.

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Real Estate Journal · Spring 2016

Real Estate Journal

IRA-Owned LLCs ...continued from page 3 of section5112(a) of title 31, United States Code, (ii) a silver coin described in section 5112(e) of title 31, United States Code, (iii) a platinum coin described in section 5112(k) of title 31 United States Code, or (iv) a coin issued under the laws of any State, or (B) any gold, silver, platinum, or palladium bullion of a fineness equal to or exceeding the minimum fineness…if such bullion is in the physical possession of a trustee described under subsection (a) of this section [emphasis added].

To recap, the statute authorizing the creation of the trusts known as individual retirement accounts (IRAs) states that an investment in collectibles shall be considered to be a distribution (taxable event) from the account in the same amount as the purchase price of the collectible, except when the IRA purchases certain types of gold, silver or platinum coins, or certain types of precious metals of a requisite fineness. As you look deeper into 26 U.S.C. 408(m)(3), you will notice a distinction. When you compare 408(m)(3)(A) to 408(m)(3)(B), you will notice that (3)(B), which specifically deals with bullion, says the bullion must be in the physical possession of a trustee. That requirement is not set forth in 3(A) regarding certain coins. Right there, various proponents of an IRA-owned LLC buying gold coins and storing them in a vault in the basement of their own home feel like they are safe. Not so fast, my friend! You must remember that the purpose of an IRA is a trust. Remember the necessary elements of a trust? You must also remember that just because the code doesn’t say “physical possession of a trustee” in the coin section does not mean the IRS won’t try to enforce it. For those who would doubt the accuracy of the preceding statement, please consider the actions of the IRS itself, how it contradicted its own Publication 590 as it related to the 60-day rollover rule just a few years ago. Unless the code is crystal clear, the IRS rules and regulations are whatever the IRS wants them to be. For the sake of argument, let’s go along with those who advocate storing gold coins owned by your IRA in a safe in your own home. First of all, it has to be a coin of a certain degree of fineness which is purchased with IRA dollars. This immediately exposes the account holder to an extremely onerous transaction as far as markups, Real Estate Journal · Spring 2016

commissions, fees and shipping when buying such “coins.” Such assets are not sold at or near spot or melt value. Furthermore, the IRS code uses the word “State” with a capital “S”. Some individuals may choose to read the term “any State” to mean only a U.S. state, not any foreign state (country). The argument that Canadian maple leafs are included under this expanded interpretation of “State” quickly goes away. For those who might argue to the counter and indicate that coins of other foreign states are implicitly included in the word “State” in this section of the code, allow me to remind you of the ill fate of the Krugerrand. Not only did it lack the requisite fineness level, but it became politically disfavored. Those who need a crash course on that politically incorrect form of gold need only watch one of the Lethal Weapon movies made by Mel Gibson and Danny Glover to quickly see how gold in that form can become ostracized and politically toxic. Back at the beginning of 26 U.S.C. 408, in §(a)(2), it describes the trustee as “a bank…or such other person who demonstrates to the satisfaction of the Secretary [of the Treasury] that the manner in which such other person will administer the trust will be consistent with the requirements of this section.” It is clear that the legislative intent imposed by Congress through this statute indicates that not every Tom, Dick or Harriett should have free access to his or her own IRA funds. Just think of all the potential fraud and abuse that could occur. How would you be able to fairly and accurately track the value? What would prevent an account holder from pledging the gold or silver coins owned by his or her IRA as collateral for a personal loan, or taking and liquidating them at a coin shop or pawn broker? My commentary to anyone who wants to proceed with this line of investment is to be very careful and educate yourself thoroughly. Get an opinion letter, not from the representative of a company trying to sell you on setting up an IRA-owned LLC that will buy overpriced gold or silver coins for your home storage, but from a disinterested, non-affiliated third party who has the appropriate qualifications to render such an opinion so that if, and when, you should receive an unfavorable ruling from the IRS, you at least have some credible source to rely on in an effort to minimize your negligence penalties.

Bed Bugs ...continued from page 5 Myth

If only we still had access to DDT we could defeat bedbugs.

Reality

bedbugs were almost all but eliminated from the industrial world due to availability and broad use of numerous pesticides, with DDT being the most common. Since the ‘70s, when the United States banned DDT, significant parts of the world still utilized DDT, especially in Africa and Asia. Since that time, decades have passed and thousands of generations of Bedbugs have been exposed to various levels of those pesticides, passing on increased resistance. The resistance is so strong in various strains that some bedbugs are resistant to DDT at 1,000 times the concentration it was previously used. Sadly, there is no silver bullet, and even pesticides that are currently effective will lose efficacy over time. a transportatble, and ubiquitous pest is disconcerting. Short of genome testing each bedbug, there would be no way of knowing where each bug actually came from, or to where it relocated and spread. Part of the fact pattern behind this case derived from an ownership entity acknowledging they had not pursued pest control with any diligence, but how much diligence will the next certified class action suit require? The fourth study that revealed troubling information was reported in Scientific American, and being monitored by the CDC on a related issue of Chagras disease and the Kissing Bug. The Kissing Bug is a larger cousin of the bedbug, and lives primarily in South America. The Kissing Bug transmits another parasite called the Trypanosoma. Cruzi which it leaves behind in defecation. When defecation occurs next to an open wound, the parasite is transmitted to the human host. The Kissing Bug typically defecates as it drinks from humans, thereby creating a nearby wound for the parasite, or as scientist refer to it, a disease vector. With recent cases of Chagas disease increasing dramatically in the southern US, scientist began investigating if there might be another potential disease vector by way of the Bedbug. Initial reports from 2014 have shown that: “…bed bugs carrying T. cruzi can transmit the infection to laboratory mice via infected feces deposited near a bite wound. Not only did the bugs

infect mice, clean bugs also picked up the parasite from infected mice.” New studies are ongoing. However, the potential for Bedbugs to be classified as a disease vector, could raise their threat level to that of “vermin”. As such, Health Departments would begin a renewed focus on Bedbugs, increasing regulations and controls on how they are to be exterminated. The courts would likely not be too far behind. On a more hopeful note, a new company in Ohio has developed and patented an active trap that incorporates deadfall drops with glue traps and an active solution that works at drawing bedbugs for 30 days. The ClearVue traps should be coming on the market in mid-May for approximately $10 for a 2-pack. By using such a device Management Companies and residents alike will be able to inexpensively monitor for potential bugs, as well as track the effectiveness of pest control efforts. With glue traps having proved ineffective at drawing Bedbugs and other products at three to thirty times the price, a local apartment association has been working with ClearVue to help test and encourage the company to bring the traps to market. Learn more at www.ClearVueTraps.com

Real Estate Journal

Real Estate Journal 路 Spring 2016

Real Estate Journal

Member Spotlight

...continued from page 15

Do you have a real estate What has been your top license? struggle in this business?

Yes, I am the Principal Broker for One word; Cashflow. I have Whitney Buys Houses, LLC. We a regular 9-5 job managing are a real estate firm that focuses commercial and industrial on fix & flips under $150,000. properties. I do my personal investing on the side, in my spare What projects are you time. As you can imagine, I have to strike a delicate balance between currently working on? We have an 89-acre auction planning a future empire and coming up in May or June. I’m also keeping food on our table. quoting a job to auction 12 condos in one development. We have also What do you like most about teamed up with auctioneers and what you do? I love people and am the definition of an extroverted, type-A person. I love to be out and about making deals, talking to sellers, interviewing buyers, and promoting my lifestyle. Real estate consumes my days and interactions on a regular basis. I have lost the ability to make small talk unless it’s about deeds, dirt, marketing, or tenants!

Do you have a tip or advice that you would pass along to other investors? brokers across 30 states to bring the best of the industry to the eyes of the buyers. We advertise ourselves as an accelerated sales team. Instead of listing a property and praying it sells within a year, my auction listings are going to bring the best bid on the market with 30-45 days. Regular listing agents can’t promise those results.

How much time do you put into your real estate education?

I consider myself a lifelong learner and have spent weeks in classes, seminars and workshops all across the country. I am constantly reading investment blogs and magazines because I believe you can’t get enough information about real estate investing.

Keep going and don’t let one setback or struggle deter your dreams. Take the bumps and bruises while you are young and bounce back as soon as you fall. Find a specialty and massage it until you’re the expert. Keep going.

Does your business have a Do you have any interesting website? hobbies or something unique www.WhitneyNicely.com that you like to do? Being a kid at heart, I love adult Can we find you on Social coloring books and ice cream Media?

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be crazy not to belong to the REIA because no one else understands my hectic daily life better than those already in it.

What are your favorite selfWhat are your current and help or business books? future goals?

I surround myself with smart, For 2016, I want to conduct ten opinionated women at all levels of real estate auctions, purchase ten real estate success. Cyndy Dumire single-family homes and three is an investor in Pennsylvania with commercial properties. a great course on lead generation. Stephanie Ionnatti developed a system to buy off-market Real Estate Journal · Spring 2016

the classroom. In the summer, I love to have my hands in the dirt gardening but sometimes working on a house-flip with my crew. I am always ready to go for a boat ride in warm weather - I love being on the water. I collect vintage Hermes scarves and anything stamped Cartier. One year for my birthday, I bought myself a vintage Louis Vuitton trunk from 1870 at an auction.

sandwiches. I take my stepsons Twitter - @WhitBuysHouses to the library or bookstore as How important is joining a much as possible so they can Instagram- @WhitneyBuysHouses local REIA to a new investor? learn to appreciate books outside Facebook- Whitney Buys Houses Knox REIA is an essential part of my ongoing education and networking opportunities. I am constantly learning from seasoned investors and share good and bad experiences with other investors. I fully believe there are enough opportunities for everyone. I don’t see it as a room full of competition – I see it as a reservoir of wealth, knowledge and experience. I would

Has coaching or mentoring played a part in your success? Absolutely! My parents mentored me about investing since a young child and my first broker helped me stay afloat until even she realized I wasn’t cut out for listings and regular buyers. She helped steer me toward auctions where I have thrived. I also mentor new investors through my coaching on my website.

properties in seven days or less. She and her husband run a REIA in SW Florida, along with Lisa Donner. Lisa is a multi family unit millionaire. Some of my personal favorites are not real estate gurus, but their professional advice has led me to bigger success within real estate. Lenise Williams is the best branding coach and attorney. Livi Anderson will teach you how to prioritize your personal life to utilize your professional life.

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Magic of Leverage ...continued from page 8

can choose a more risky “up and coming” kind of property. If you are using leverage choose an area where, even if rentals decline, you could sell the property easily. Remember that rental property isn’t as liquid as stocks, bonds or mutual funds. A high quality property makes it easier to get out if an emergency strikes. My most valuable advice is be prepared for the business of rentals and keep in mind that it is most certainly a business! Either get serious about your education and dedication to the business or hire a good property manager. Get several references and be certain that they are current. Finding a good property manager or firm can be the most difficult and frustrating part of investing! Finally keep in mind that any investment that produces any reasonable return involves some risk. I believe that real estate isn’t nearly as risky as the current stock and bond markets (negative interest rates anyone?) but there is always

Real Estate Journal · Spring 2016

some uncertainty. Be honest with yourself to make wise choices. Although I am not a financial advisor and cannot give any kind of financial advice I will tell you that I have moved nearly all of my investments into real estate of some kind. If the real estate holdings themselves are not your cup of tea you may want to consider being a private lender yourself. Experts will tell you that a balanced portfolio is best. I believe that adding real estate, in some form, to whatever investments you prefer will bring you far greater returns than stocks, bonds, and mutual funds alone could bring. I speak from experience when I say that using a little leverage for income-producing rental real estate can build wealth much faster than other traditional options. Just remember, it’s “the magic of leverage.”

Mama Didn't Raise No Fool ...continued from page 17 If you must work on vacant property alone, lock the doors, keep a phone on your person, tell someone where you are, and arrange for someone to check on you at prearranged times, by phone or in person. Take extra precautions to make sure that you are following normal safety rules in your workplace. Be particularly careful using power tools. Save heavy lifting or ladder work until you can get someone to help you. Whenever you work on property, make sure it is equipped with working smoke alarms, fire extinguishers, and bring a first aid kit. Never confront problem tenants alone. Too many landlords have been injured or killed by angry tenants. Handle the problem by phone, with a friend, or hire a professional to serve the appropriate notices. Do not get in the middle of an argument between tenants. This is a no-win situation. Let them work it out alone, or let the police handle it. After you have assessed the situation, and determined what the real problem is, send the appropriate notice to the offending party or parties. Keep a low profile. Many folks advocate that you should never let your tenants know that you own the property. Many of the reasons behind this are for financial privacy. For safety reasons you are better off if the tenants don't think you are the owner. If at all possible do not let tenants know where you live. (Of course if you live in your owner occupant rental property this is a tough one.) In a fit of anger a tenant is unlikely to go through the court house records to find your address, but he may look you up online or in a phone book. As you start practicing financial privacy you will want to own your properties in a trust. Get the tax bills sent to the trustee of the trust, or to a management company at a post office box in a neighboring town. Change your business practices to avoid personally collecting and handling cash. Don't collect rents in cash! Arrange with a bank in the area to accept rent deposits, or get the tenants to mail them to your post office box. Even those tenants that don't have bank accounts can get money orders. Let them take the risks handling the cash. If you have an office in the building, still insist on checks or money orders. There is nothing that says "cash available here" any stronger than your "Rental Office" sign on the first of the month.

Encourage new tenants to give you their deposits enough in advance that the bank will clear them before you need to give the tenant the key. If this is not possible, insist on certified or cashier's checks for their initial rent and security deposit. There is no reason that you should take the risk of carrying these funds around in cash. Take sensible precautions when hiring contractors. Know who you are meeting at the property. You are not in as much risk meeting someone that you have called, as meeting someone that has called you, but this does not mean that you can throw caution to the winds. If you are going alone, let someone know where you are going, who you are meeting and when to expect to hear from you. Before hiring anyone get references from previous customers and do your due diligence to evaluate their work and reputation. If you are having problems with a contractor, and are needing to confront them about the quality of the work, or their job performance, do not do it alone. If possible set some ground work by phone so that any anger has a chance to dissipate. Try to catch quality and performance problems early, so that corrections can be made before they become expensive. Tenants and strangers answering your ads are only one source of potential trouble. Workers are another. We've had one friend who killed by a disgruntled resident maintenance man he had fired. Consider taking some classes in self-defense. At the very least read about it. Basic self defense classes are like defensive driving classes. They make you more aware of your surroundings and escape routes. Through this awareness you can often avoid problems by anticipating them. Last, but not least, keep it in perspective. There are risks that we all take to be in this business. The instances of landlords being attacked or killed are certainly the exception, not the rule. Your level of risk depends on the neighborhoods you work in, and the people you deal with. Many of you are far more likely to be injured while working on your property. Whenever you can, take sensible precautions. The financial rewards, as good as they are, are not worth your life or health.

Real Estate Journal

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Real Estate Journal · Spring 2016