July 2018
In this Issue 1. National REIA Cruise 2. Partnerships with other investors 4. High priced homes hit Clark County market 5. Cities with highest share of vacation, investment and second home
National REIA Cruise Takeaways Written by Jenny Dong, Northwest REIA Board member
Main Meeting with Richard Uffelman Thursday, July 5, 6:30 pm
The DoubleTree Hotel, 1000 NE Multnomah St., Portland
Last year I won the contest Northwest REIA ran: a free cabin on the 2018 National REIA Education Conference Cruise to the person who recruited the most members. My business partner and fellow NWREIA board member Limei Yang accompanied me when we finally took off from February 26 to March 2 of this year. Don’t be fooled, though—this “Vacation with an Education,” is more than a luxurious getaway. 254 members from 26 states came this year ready to buckle down and work. The first day we cruised the high seas while attending classes from 9 am to 9 pm learning about title holding trusts for real estate and IRA, seller financing strategies, investing with IRAs, residential living and “rehabbing and maintenance.” Each day Limei and I didn’t miss a single class and we soaked up every word those well-known experts spoke. We even seized the opportunity to network during meals, making the most of our time. Cincinnati is the headquarters of National REIA, so much of the attendance came from Ohio followed by Illinois, New York, Florida, who all contributed about 10-15 members each. Many members come every year and have developed friendships and even business partnerships. One guy we met has been attending the National REIA cruise for four years. He has reaped what he has sown by, in the first place, beginning real estate investing and is now a landlord, he wholesales, flips and manages properties. Some of his deals were even partnerships with people he met from the cruise. We took it upon ourselves to talk to the speakers, even inviting a handful to present at our Northwest REIA meetings back home. We especially liked Gary Wilson of “Massive Passive Cash Flow Method,” “Tom Zeeb of “Wholesaling: The Continued on page 4...
Financial Freedom for Women Monday, July 9, 6:00 PM Beaverton City Library, Room B 12375 SW 5th St., Beaverton
Rental Property Investing Tuesday, July 10, 6:30 PM CANCELED Salem Round Table Thursday, July 12, 6:00 PM
Salem First Baptist Church, Room 422, 395 Marion St. NE, Salem
Deal Analysis and Discussion Thursday, July 19, 6:30 PM
Round Table Pizza, 10070 SW Barbur Blvd., Portland
Vancouver and North Metro Meeting Monday, July 23, 6:30 PM Round Table Pizza, 13009 NE Hwy 99, Vancouver, WA
Pre/Post Foreclosure and Legal Discussion Tuesday, July 24, 6:30 PM CANCELED Cashflow 101 Game Night Thursday, July 26, 6:30 PM Round Table Pizza, 10150 SW Beaverton-Hillsdale Hwy., Portland
Main Meeting: Tom Zeeb Thursday, Aug. 2, 6:30 PM; Saturday, Aug. 4, 8:00 AM
The DoubleTree Hotel, 1000 NE Multnomah St., Portland
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Should you do Partnerships with Other Investors? By Tom Zeeb, TractionRealEstateMentors.com
Are two better than one? Is there strength in numbers? Should you do partnerships with other investors? The answer is: “it depends”. There are a lot of criteria to evaluate when considering if you should take on a partner in your business.
Property management Eviction services Residential and commercial real estate sales Contact Christian Bryant: Christian@ircenterprises.com, 503-999-0477
In my experience and from my observations, partnerships of inexperienced investors tend to feel good for those partnering up, but don't succeed because there is no real balance of skills and knowledge. And there are quite often very different objectives as well that make the two parties incompatible as long term business partners. Inexperienced potential partners feel good together because both investors are struggling and afraid to get started. Therefore they feel comfortable with each other because they are in the same boat.
Travis Wandell 425-503-3897 travisw@veristonecapital.com
However, two struggling people with no experience do not bring much to the table. It is a partnership without any true benefit to either party other than having someone to share the ride with. Intermediate to advanced investors also need to be cautious about partnerships. Once someone has done a few deals, they develop their own style and method for doing business. This may clash with another investor, especially as entrepreneurs tend to be very independent minded and strong willed.
Paul McGann Account Executive 424.336.7927 | 805.402.2969 | paul.mcgann@civicfs.com
In the case of both the beginner and advanced investor, it is important to be sure that both sides see eye-to-eye on what their personal financial and business goals are. Continued on page 7
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Bijan Tavazoie Regional Sales Executive 1905 NW 169th Pl., Suite 100-B Beaverton, OR 97006
Northwest REIA Volunteers We appreciate our dedicated volunteers, and we’re always looking for additional volunteers. If you’re interested, please contact our office at members@northwestreia.com
Brandon McGraw—President bmcgraw@equitypropertysolutions.org Trevor Kitchen—VP of Operations tkitchen@equitypropertysolutions.org Donna McGraw—VP of Customer Relations dmcgraw@equitypropertysolutions.org
August Main Meeting “Wholesaling: 60 Days to Done!” and Saturday Workshop “Wholesaling: The Rapid Cash Generator Masterclass” Tom Zeeb is ready to share the techniques that set him free, personally and financially. Thursday, August 2, 6:30 pm and Saturday, August 4, 9:00 am| The DoubleTree Hotel | 1000 NE Multnomah St., Portland
Alan Davis Marty Sockolov Grady Radford Al Bullard Janel Page Carl Royer Tom Stutzman Richard Schacht Jenny Dong Doug Rich Derek Rich 3
July 2018
Continued from page 1... Rapid Cash Generator Master Class,” “Anthony Chara of “Multifamily Investment,” Tony Young of “Hiding Market” and Paul Rossano from the company FYNANC, who is now a NWREIA vendor member. While we worked hard in each class, we’d be lying if we said we didn’t take some time to have fun. After all, it’s not every day that you get to pass through tropical paradise. But all the sand, sun and historical sites we paused at like Chacchoben Mayan Ruins refreshed us before we “hit the books” once again. I had a wonderful time and am grateful to have enjoyed so much sunshine in the dead of winter. I visited three beautiful Caribbean islands, met so many inspiring and diverse people from different states, and ultimately felt very honored to represent our chapter at this cruise. I got the chance to network with other chapter leaders, gleaning helpful information from experiences of those running their own real estate chapters. Most importantly, this cruise totally opened my eyes to how real estate markets differ in the United States; some states are just picking up and many houses still sell for less than $100,000 in other states. Above all, Limei and I were able to incorporate what we learned at the cruise into our “Financial Freedom for Women” meeting we host, so that it’ll be further enhanced. Join us at our next meeting on Monday, July 9, 6-8:00 pm at the Beaverton City Library. Register at northwestreia.com. If your interest in the National REIA Cruise is piqued, check out their website for details at https://nationalreiacruise.com/.
More Homes Hit Market in Clark County; Prices Up More homes are hitting the market in Clark County this year, but they’re barely satisfying demand and keeping prices in the rafters. The latest data from the Regional Multiple Listing Service shows there have been about 10 percent more homes for sale so far this year, but buying activity is almost as aggressive. Median home prices have risen to $350,000. The raw numbers: 4,860 more homes have been listed this year, compared with 4,421 last year. Closed sales have risen from 3,108 to 3,303. Real estate agent and analyst Mike Lamb called the year so far “really significant” for demonstrating the demand for new homes and people’s willingness to pay despite the swelling prices. “It’s significant. You can see the growth in the listing activity and the growth in sales. I think it’s the best total sales, year-todate, since 2005,” he said. “And we’re coming off several really, really good years.” Affordability continues to be a mixed bag in the area, however. The rise in median home prices can be prohibitive for first-time buyers. But, Lamb noted, Clark County is still cheaper than the
Paul Rossano paul@fynanc.com 4
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likes of Seattle and Portland.
Portland’s median home price rose to $409,000 in May, according to the RMLS, which is 5.4 percent higher than it was this time last year. Meanwhile, Clark County’s is 11 percent higher. That rise could still be fueled by new arrivals to Clark County, Lamb said. As reported earlier this week, Clark County’s population grew 1.8 percent over the last year, but that growth is actually slowing compared to recent years.
“We see them,” Lamb said of new arrivals. “It may have been because I’ve had several people tell me that with retirement looming and high income taxes in Oregon and California, the fact that we don’t have state income tax is really fueling this trend.” Real estate is booming in some places more than others. Homes in rural areas around Ridgefield and La Center, as well as east of Amboy, have topped $500,000 in median sale price so far this year. Meanwhile, Camas and Brush Prairie have been the busiest cities for sales so far and boast median prices of $469,900 and $395,000, respectively. Median home prices have hit $343,500 in Battle Ground, $360,000 in La Center, $390,000 in Ridgefield and $409,900 in Washougal.
Credit: The Columbian, Troy Brynelson, June 29, 2018, https://bit.ly/2tGtw3E
LendingTree Reveals the Cities with the Highest Share of Vacation, Investment, Second Homes The housing market is characterized by a lack of inventory for both new and existing homes. In the existing market, there is a shortage of current owners willing to sell, a problem that could be exacerbated by rising interest rates. Rising rates create a “lock-in” effect where current owners are dissuaded from selling and moving as their new home would be at a higher rate. In the new market, homebuilders are facing rising prices for inputs and labor, which are eroding their profit margins. This is particularly acute for lower-priced homes that are not being built fast enough. In this environment, every unit of inventory makes a difference for homebuyers. Our study looks at the share of mortgages made for non-owner occupied properties to gauge their impact on inventory. Non-owner occupied properties are either vacation homes, investment properties or second homes. Many such properties are often bought for cash, however, which means our mortgage focused-study likely understates the effect on the market. It also seems logical to surmise that buyers getting a property for anything other than their primary residence might have stronger financial resources than the average buyer of an owneroccupied residence. For the 50 cities we looked at, non-owner occupied average income was Continued on page 6...
Northwest REIA has a Facebook Group See what members are up to and post questions at our Facebook Group. The purpose of this group is to provide a members-only forum where info can be shared and questions asked. https://www.facebook.com/groups/ NorthwestREIA/ 5
July 2018
Continued from page 5... $163,000 compared to $117,000 for owner occupied. Thus, such buyers may be in a position to pay a higher price. In economic parlance, non-occupant buyers could crowd out homebuyers, making a market more competitive and pricier. Our data below ranks the top 50 cities by the share of non-owner occupied loans based on the recently released HMDA data for 2017. We also look at the average loan amounts for the two groups to see if there are any insights there. For the full article, go to https://bit.ly/2HUlVTg Credit: LendingTree, Tendayi Kapfidze, June 11, 2018, https:// bit.ly/2HUlVTg
Ryan Hawthorne rhawthorne@financeofamerica.com (360) 553-3127
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Continued from page 2... For example, if one partner is younger and broke and wants to wholesale everything for quick cash and the other partner is older and more interested in cash flow and appreciation and wants to buy and hold everything, then the partnership is going to have trouble. The same would be true if the partners had very different risk tolerances. If one partner wants to renovate everything for the “big bucks” but the other partner is scared of the time and money involved and just wants to wholesale for quick cash, then the partnership will have trouble. At the end of the day, it is wise to remember that there is only one captain on a ship. It is a rare partnership that doesn’t have any serious friction. For those partnerships that do work, the partners have a good understanding of each other’s personalities and of their own strengths and weaknesses and well as their partner’s strengths and weaknesses. They also share very similar goals and expectations for what they want to get out of the business partnership. Partnerships can be out of balance because of overlapping strengths or both sides being weak in a certain area. Double weakness = problems externally Double strength = internal clashes Do not underestimate this. Recognize where these overlaps occur and work with your partner to ensure that you find a way to account for the problems that can occur. If you do find a good partner and decide to join up for long-term business purposes, be sure you legally construct an entity to protect yourselves from each other. Have an attorney draft up an operating agreement that clearly states what happens if the partnership dissolves. Decide on the details of how you would split up front when you are still on friendly terms. Trying to do that once the relationship has soured is not easy or pleasant. If you are just partnering up on an ad hoc basis for certain deals, use a Joint Venture (JV) arrangement. In all cases avoid the general partnership, as it provides no protection and actually makes you liable for the other party’s actions.
The main questions to ask yourself when considering a partnership are: Is your partnership profitable? Do both sides bring something to the table? Will two be better than one? -- ### -Tom Zeeb has been featured by CNBC, The Washington Post, Kiplinger's Magazine, The Washington Examiner, Financial Lifeline Radio and National Real Estate Investors Association's Magazine among others. He is the President of Traction REIA, the Recipient of the National REIA "Honors of Merit" and the "Award of Excellence" for Best Real Estate Investor Association! Traction REIA serves the Greater Washington DC Metro Area. Check out www.TractionREIA.com and www.TractionRealEstateMentors.com for more information. Tom Zeeb is our August Main Speaker and Saturday workshop presenter. Register for both events online at northwestreia.com. Thursday: Tom’s 90-minute presentation , “Wholesaling: 60 Days to Done!” Saturday: “Wholesaling: The Rapid Cash Generator MasterClass—More Deals. More Profits. More Freedom.” Who this event IS for This event is perfect for you if: -- You crave a lifestyle of freedom and options. -- You want to be on your own with no boss or 9-to-5 J.O.B., be personally responsible for your own outcomes, and be selfsufficient. -- You want to learn the right way to build a successful real estate investing business that will fund you, your family, and your lifestyle for many years to come. Who this event is NOT for This event is NOT for you if: -- You think money should fall from the sky with no active effort or WORK from you. -- You wait to implement what you learn, or think someone else should do it all for you. -- You believe in “get-rich-quick” schemes or “push-button” money.
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Northwest REIA Board Members President: Christian Bryant, Legislative Committee Treasurer: Sam Wong Bob Thomas | 503-828-4340 bthomas@merchantsmtg.com
Ingrid Chavez 281-492-3434
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Dick Uffelman, Bylaws Committee Steve Nagel, Ethics Committee Limei Yang, Membership Committee Richard Schacht, Program & Nominating Committees Dan Butler, Library Committee Jenny Dong Darryl Craig
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