14 02 feb kreia newsletter

Vol 14‐02 Monthly Newsletter for KREIA Members

President’s Letter

President’s Message

page 1

Featured Speaker Alternative Financing Joe Varnadore page 3

Saturday Seminar!

March 1 at Wildwood page 6

Welcome New Members!

Must Have FREE Apps! page 4

BIG Fat Check! page 5

Thanks to Mike Grinnan for last month’s Meeting!!!

I learned a lot about the past and my 2014 Planning!!!!

Are you ready for what’s coming in the next couple of years? It will look different than the past 4‐5 years (Post 2008 crash.)

Dennis Erhard

If you keep doing business as usual, you might find yourself falling behind the curve. Many of our members have learned these painful lessons (post 2008.)

They have made significant changes to the way they do business!!! Shouldn’t you?

Looking into the future we see significant changes once again beginning to take shape. This month we have Joe Vamadore from Eddie Speed’s NoteSchool.

Did you know there are approximately 2 ½ times the number of Delinquent Mortgages in the United States than homes that have been foreclosed on in the last several years. Wow!!! Sounds like a game changer for the educated Real Estate Investor.

Get ready to learn how to navigate the Note buying Business. Learn how to get started in days.

Learn how to use your IRA to make tax FREE often double digit results.

Where Are You? page 7

DODD FRANK the simple version page 8

LOTS Program & Calendar page 9

Mentor Program page 10

How to purchase NOTES without using any of your own money & much more.

Don’t forget to join us on Saturday March 1st to expand on these and many more strategies.

Let’s learn together. HOPE TO SEE YOU Thursday night and Saturday Morning!!!!

Dennis Erhard Quote of the Month: “Every great dream begins with a dreamer. Always remember, you have within you the strength, the patience, and the passion to reach for the stars to change the world.” Harriet Tubman

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

KREIA Newsletter

President Dennis Erhard

Vice President Frank Miller

Secretary Treasurer Treasurer Elect Chris McCarty Mike Grinnan CPA Fred Helm

Board of Directors

Mike Butler

Tamara West

George Foree

Duffy Ford

Eric George

Dan Jones

Jean Hall

Mark Hass

Fred Butler

Rue McFarland

Wally Kallbreier

published monthly and serves both as a newsletter and a reminder notice of your upcoming monthly meeting.

KREIA is a member only association focused on education, networking, and resources for today’s investor and to educate real estate investors from the basics to the complex. We are an excellent choice for all levels of investors. Whether you are just starting out in real estate investing, or are working on your hundredth deal, KREIA can help you learn more, earn more, and have more fun doing it.

To Subscribe to the KREIA Newsletter is simple and easy. Go to KREIA.com and join the Kentuckiana Real Estate Investors Association.

Group Discounts are available.

To Advertise in the KREIA Newsletter To Advertise on KREIA.com To Sponsor A Monthly Meeting To Sponsor A LOTS Program Please contact News@KREIA.com

KREIA Sponsorships Diamond: Full Page Ad + Table + Pre‐ Meeting Speaker Only $995 or $99 mo.

Gold: Half Page Ad + Table + Pre‐ Meeting Speaker Only $499

Silver: ¼ Page Ad Only $299 Parliamentarian Hank Schildknecht

Past President Connie Horsey

Your KREIA Leaders are involved and chair several committees to make KREIA happen every month for you and your fellow KREIA Members.

Get involved with KREIA. You can help with the monthly meetings, L.O.T.S. Program, this newsletter, Saturday Workshops, Government Affairs, Social, Annual Picnic, Marketing, the new KREIA website and more PLUS You Get EXTRA KREIA Points for everything you do!

Get phone and emails of all KREIA members with the new KREIA Online Member Directory.

Reach out and tell them they are doing a great job! (It makes them do more for KREIA!)

Business Card : Ad Only $149 Event Sponsor: Meeting, LOTS,

Saturday Seminars, and more! ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐

Place Your Ad Now at KREIA.com ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ ”KREIA Advertising is by far, hands down, the absolute best advertising dollar ever spent for Borders & Borders!”

Harry Borders, B&B Attorneys

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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FEATURED SPEAKER LTERNATIVE

INANCING JOE VARNADORE

Buying and Selling Notes Investing in his first property at the age of 19, Joe learned the importance of using creative financing to make the deal work. Since then, he has created and brokered more than $30 million in note transactions on residential and commercial properties. As an author, speaker, and trainer for the past 25 years, he believes that there has never been a greater opportunity for real estate investors to use non-performing notes to acquire properties and seller financing to cash out.

What You Will Learn  Why the Note Business is the Hottest Topic in Real Estate Today and why the Government is pushing it!  How to get started in just days  How to earn velocity income without using any of your own money  Why Real Estate Agents, investors, builders, property buyers and sellers are creating a strong demand for these services and how you can cash in by becoming the “go to” person  Why flipping notes is easier and less time consuming than flipping properties  How to “paper out” of properties and triple your net income  How “anxious money” is changing the industry making your opportunities greater than ever before  How to become a Note Buyer with as little as $100 dollars  How to apply your current real estate knowledge and skills to make even greater profits with the note business Saturday, March 1, 2014

Full Day Workshop - What You Will Learn  See case studies of real deals showing you how our students are closing hundreds of deals!  Understand why Non-Performing Notes are the New REO  Sell landlords loaded rentals using our innovative 50/50 model that will have you making lump sum cash now and long term monthly cash flow  That you can profit while significantly helping people suffering from the mortgage meltdown  Make cash flow like a landlord without the hassles of being a landlord  Use your IRA or 401k to make tax free- often double digit returns  How just one of our students has completed 28 transactions so far this year using little to none of his own money and you can do the same  Why note investors are making double digit return on investments right now  How to purchase notes without using any of your own money  Why Fannie Mae, Freddie Mac, HUD and FHA see the note business as the solution to the real estate crisis  How government mandates are driving the business!!

And much, much more!

Register Now at KREIA.com

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Welcome New Members!

Lauren Willoughby James Wright Arjan Manwani

Steven Richie Clay Smith

MUST Have FREE Apps!

Better than HP12C

No Member Spotlights were submitted Please submit yourself or a fellow member

http://kreia.com/submit-member-spotlight Powerful Resource

Allows your cell phone To process credit cards!

New York Times says One of the TOP 10 Must Have Apps!

Imagine having a Flash Drive in the sky!

Work with your files

Similar to drop box, But faster and easier

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Ben Rao of CBG presents Revenue Share Check to KREIA President Dennis Erhard

Google Drive

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 Your New Best Friend  Much Needed Tool  And it is FREE! Just because it is free does not mean it is valueless.

The question is why this is so very important to us and why has no one spoken about it? Here goes from a non tech person.

The utility allows filing of all documents in one place. Let’s take single properties. Imagine a hanging file with various paper folders. Each hanging file has a property identifier and the paper folders could be marked 1. Tenant’s, 2. Expenses, 3.

Insurance, 4. Mortgages/Loans, 5. Contract/Deed/Closing and 6. Pictures and Photographs.

All of these are useful when out in the field and can be accessed from practically any device. The important part is being able to access the photographs at any time. It is these selfsame photographs that are going to be used for A. Advertising, B. Move-in condition confirmation and C. Move out confirmation of condition.

What this means is an easy and painlesss way move to a paperless and more importantly mobile office.

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Eddie Speed’s

LTERNATIVE INANCING OR ODAY S CONOMY

Doors Open 8:30am Class 9am‐4pm INCLUDES HOT LUNCH BUFFET!

Saturday, Mar 1st, Wildwood Country Club, 5000 Bardstown Rd. Louisville, KY 40291 FEBRUARY 27TH MEETING FEATURED SPEAKER JOE VARNADORE What You Will Learn Saturday with Joe  See case studies of real deals showing you how our students are closing hundreds of deals!  Understand why Non‐Performing Notes are the New REO  Sell landlords loaded rentals using our innovative 50/50 model that will have you making lump sum cash now and long term monthly cash flow  That you can profit while significantly helping people suffering from the mortgage meltdown  Make cash flow like a landlord without the hassles of being a landlord  Use your IRA or 401k to make tax free‐ often double digit returns  How just one of our students has completed 28 transactions so far this year using little to none of his own money and you can do the same  Why note investors are making double digit return on investments right now  How to purchase notes without using any of your own money  Why Fannie Mae, Freddie Mac, HUD and FHA see the note business as the solution to the real estate crisis  How government mandates are driving the business!!  And much, much more!

KREIA Members Only $49 2 for $79 Guests Only $99 WALK Ins Pay $99 at the Door!

Last minute walk ins cause a mess for pre‐planning Set Up and Hot Lunch

www.KREIA.com

Joe Varnadore is a real estate investor, mortgage broker, cash flow specialist, and entrepreneur. At the age of 19, he purchased his first piece of real estate. Since then, Joe has started and sold numerous businesses and truly believes in creating multiple streams of income. Joe has his real estate and mortgage broker licenses and has been buying and selling real estate and debt instruments for many years. He is a published author and an experienced real estate, debt instrument, and small‐business development consultant and lecturer.

Copyright MMXIV Kentuckiana Real Estate Investors Association•PO17592 • Louisville, KY• (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Investor Stages – Where Are You? I had wasted hours of time being confused and by perusing the incorrect strategy more than once, not only with a specific property, but more importantly, when not being clear in my mind about the different stages of my investment career.

When starting out all one sees is a huge amount of confusing information. How does to get into property? Where do to money to get started? I feel so fearful about making offers.

attention the what happens if and when the person you have put in to take over the responsibility, fails to meet his/her obligation. You absolutely do not need to be caught in a legal quagmire therein the buyer and seller turn to you to remedy the inevitable financial fallout. It is my view that you really need to be hugely experienced and understand the implications of doing this type of business.

It would be far better to partner with an experienced investor until such time as you fully understand the ins and outs.

How does one get a property under contract for less than 65% of the after repair value (ARV)?

As a warning, be very aware there are some attorneys who sell a specific brand of “subject to” and they may not be working in your best interests.

Added to all this, is the conflict within one's mind about buying property to hold and generate cash flow or sell immediately for instant cash.

And now we get to the really profitable side of the business, and this should not be attempted by anyone until they really know what they're doing, they are exceptions of course.

So let's have a look and see if there is a natural progression to the development of a typical successful investor.

What we are talking here about is the financing of property, is the creation of notes. We buy the property first and then sell and take back the financing.

First off and easiest way is to start is driving for dollars.

Find the buildings, put them under contract, and sell them to an experienced rehabber or investor. The goal here is to make fast cash to help build your business. And that we shall call wholesaling.

Once you have a cash hoard and you know how to generate funds from various sources it is relatively simple to move into the area of rehabilitation of broken properties. The strategy is not for the faint of heart. One has to deal with all sorts of things including contractors who may or may not be reliable.

One has to understand there is an inherent conflict between what you need and what the contractor needs. You need the least lowest price, the contractor needs more money to live and he needs cash right now! Contractors are notoriously bad at doing/controlling their own budget. If they were good at doing their budgets, the contractor would be doing what you're doing. Logic 101.

The upside of this stage in the development cycle is often where we make the most ready cash per transaction.

We have now rehabilitated a building and we have choices.

You may elect to as I alluded to the previous paragraph, sell on the open market or turn this property into a keeper. The keeper by definition will generate an income over a period of years with the possibility of great appreciation in value sometime in the future. Often this requires a clear understanding of where you are in the market and we intend to be in the near and long‐term future. To illustrate the point, if you are in your 20s you do not want to retire, collecting keeper property is not that important.

Experience tells us that in our 20s and 30s we need a much higher cash flow simply to live and pay for our families. Later in life, one's personal maintenance costs seem to be reduced and steady monthly income becomes a high priority.

Running on from this last thought, I come to the concept of “subject to” property acquisition. Many courses have been written about this way of doing business., My recommendation is to spend a long time learning which one of these is going to work for you.

You will be the bank.

You will be buying good older properties at huge discounts and then selling them for higher price by providing the financing.

Let us itemize the stages here a. become a wholesaler b. become a rehabber c. become a landlord d. become a bank ================================================

Is It A Job Or Is It Wealth Creation?

Leverage is a wonderful tool to create wealth, provided the market doesn’t turn. Assuming someone’s loan on a property can render wonderful results.

Here’s the basic premise. An underlying loan of $100,000 will be reducing principal at over $1200 in the first year. This grows annually, tax‐free, at the underlying interest rate. For example, it may be 6%.

Next year the $1200 would now magically become $1272.

These seem like small numbers. We all know instinctively about volume increasing profits. 10 houses is $12,072 and by the same token, just 20 houses is $24,000.

Look around you and see how many people are actually putting $24,000 per year into their retirement account, tax‐ free. The magic really happens when the mortgages are older.

It is now very difficult to get new loans for a rental property.

The accepted limit at a regular financial institution is four (4) and going to the bigger commercial loans, you have to have a minimum of 10 properties.

Next time you have a few moments of quiet, think on this and add to your future planning.

The issue is not getting the properties, but draw your Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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How the New Dodd Frank Regulations Impact Real Estate Investors By: Jenny Fields (if you like the article) and Harry Borders (if you don’t) As most of you know, Congress passed the Dodd Frank Act in 2010 in response to the mortgage meltdown that began in earnest in 2006‐2007. The purpose of the act was to create an agency that, through regulation and enforcement, could prevent a similar crisis in the future.

As a part of its obligation under the Dodd Frank Act, the Consumer Finance Protection Bureau (“CFPB”) ‐ the agency created to carry out the Dodd Frank Act ‐enacted several regulations, some of which became effective January 10, 2014.

These regulations impact the real estate investor in several ways. We will look at a few of the highlights of the changes and how they impact the potential buyers of your properties and how they impact the real estate investor directly.

Impacts to Potential Buyers: Under the new regulation, there are several elements that significantly reduce the homebuyer ability to qualify for a mortgage particularly the first time homebuyer’s ability.

First, and most important, is the new debt to income ratio.

Under the new rules, the lender must consider the borrower’s ability to repay (something we hope most lenders have always done).

In new loans originated after January 10, the borrower cannot have a total debt to income ratio that exceeds 43%.

This will be a hard hit to most first time homebuyers. In addition, there will be a requirement that the total costs of the loan cannot exceed 3% of the loan value. That will be easy for a lender on a $400,000 loan – they only have to keep the total loan costs under $12,000 – but it will be hard on an $80,000 loan amount – lenders would have to keep the loan costs under $2400.

There is a strong belief in the industry that lenders will eventually stop originating loans in low dollar amounts because it will be hard from them to comply with this law

and remain profitable.

On the higher end of the sales prices spectrum, there are also plans for the Federal Housing Finance Authority to reduce the maximum loan amount, which in Kentucky is currently $417, 000 for Fannie and Freddie loans.

Direct Impact to Real Estate Investors As if getting a loan for a real estate investor hasn’t been challenging enough recently, the new changes under Dodd Frank will make it even tougher. All self employed individuals (which many real estate investors are) will have to show adequate cash flow to make loan payments. That means that either the self employed person receives regular income from their employment or from investments to order to qualify for a loan.

The Moral of the Story Although it is too early to tell for sure, it seems like most of the new regulations will make it harder for a first time buyer to get a loan (and therefore buy that gorgeous flip you just finished!).

It will also be harder for you to get financing yourself. But the most successful in our industry are the ones that adapt the best and the quickest.

We might be moving into a time of more creative financing on transactions ‐ such as contract for deeds and lease options.

Those are tried and true tools we have become familiar with.

I also believe that local banks will play a critical role in increasing our financing options in the future.

KREIA is great at keeping us appraised of these new changes and the best ways to adapt to them and with filling our tool boxes with new skills when the old methods get significantly limited and changed.

Let’s keep the conversation going! ‐ Borders & Borders Attorneys, 502‐894‐9200

Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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KREIA’s Brand New 10 Onlyine Mentoring Sessions!

Enroll Anytime – Access 24‐7 1. Why Real Estate? Rue McFarland 2. Online Local Government Resources – Tamara West

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Closings 101 – Harry Borders How to Buy – Dan Jones Wholesaling – Duffy Ford Energy Efficiency – Eric George S.W.A.T. Rehabs – Pete Youngs Landlording – Mike Butler Landlord Tenant Law – Hank Schildknecht Tax Concerns – Mike Grinnan CPA

Members Non‐members $595 Enroll Now! http://kreia.com/mentor

Rick Wardlow, Joe Gribbins, Allee Harmon, Bill Dollinger, Frank Miller Call 502‐489‐5515

http://wardlowauc.com Copyright MMXIII Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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Copyright MMXIV Kentuckiana Real Estate Investors Association • P.O. Box 91225 • Louisville, KY• 40291 (502) 509‐2216 www.KREIA.com DISCLAIMER: KREIA does NOT pre‐qualify, evaluate, endorse, guarantee or warranty any particular deal, service, company, or person. The Kentuckiana Real Estate Investors Association recommends you perform your own due diligence & seek appropriate legal, accounting, or other professional advice before making any investment. KREIA is a Member of National Real Estate Investors Association.

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PO Box 91225 Louisville, KY 40291 Return Service Requested

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KREIA’s Monthly Meeting! Thursday

Feb 27th

5:30 PRE MEETING “MORTGAGEMAN” MIKE FALLOT HOW TO BORROW MONEY WITHOUT GOING TO A BANK! LUS SSATURDAY ATURDAY W WORKSHOP ORKSHOP! !

MAIN MEETING PPLUS

OE ARNADORE