August 2017 KREIA Newsletter

Monthly Newsletter for KREIA Members

Vol 08-17 August 2017

KREIA Members, President’s Letter

1

New Sponsorship Rates

2

Main Meeting: How to Rehab for FAT CASH!

3

Mike Fallot: How to Keep Your Contractors on the Job

3

Welcome, New Members!

4

Frank Miller Launches New Mentoring Program

4

Mike Butler: Section 8 ‘Still Ugly for Landlords’

6

KREIA Photos

10

L.O.T.S.: Darin O’Neil Rehabs Lease Option House

11

Nina Musgrave: 10 Mistakes I Made on My First Flip

12

Hampton Scurlock: ‘If I Were Starting Over…’

14

Sharon Vornholt: Why You Need a Marketing Plan

16

Upcoming KREIA Events

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Wow what a great meeting and Saturday workshop we had last month! Our local experts gave a TON of great info on Building Wealth With Rental Properties, and the Saturday workshop went an extra two hours with the question and answer session at the end! “Worth way more than $99” is what we heard from several attendees, and that’s our goal — to give you great real estate education at a great value from local experts!

Eric George

Now, this month we’re teaching you how to make FAT CASH rehabbing houses!

It’s one of our most popular topics and we’re gearing up for another great Saturday workshop on the 26th, where we’ll spend half the day in the class learning estimating techniques and ways to structure offers, and the second part of the day we’ll visit a couple of vacant houses to practice your new skills!

We’re expecting over 200 people at the monthly meeting and 30-50 people at the Saturday workshop, so PRE-REGISTER TODAY for both and save some money with our early bird discount!

As always, we are looking for new volunteers to help keep KREIA running smoothly, and this month at our monthly meeting we’ll have an opportunity for anyone interested to learn more about how they can help from 6:00-6:15 in the “Early Meeting Room”!

See you August 24th & 26th!

Eric George KREIA President

Copyright MMXVII 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.

Your KREIA Leaders

President Eric George

V. Pres. Erik Hitzelberger

Advertise With KREIA

Secretary Treasurer Treasurer-Elect Dave Coffey Mike Grinnan CPA Wally Kallbreier

Board of Directors

Put your message in front of the most active rehabbers, landlords and wholesalers in the state! KREIA offers five membership levels for businesses. Go to KREIA.com and join at one of these annual sponsorship levels to get your ad in every issue of KREIA's newsletter and be invited to make sponsor pitches at meetings:

Business Card Membership . . . . . . . . $199 Includes your business-card-sized ad. Door charge at monthly meetings remains $20.

Premium Levels: These four sponsorship levels include your ½-page ad in each issue!

George Foree

Rue McFarland

Lauren Willoughby

Darin O'Neil

Parliamentarian Hank Schildknecht

Past Pres.

Frank Miller

Dennis Erhard

Tamara West

John Jones

Jeani Bryant

Rick Littrell

Mike Fallot

Clay Smith

Hampton Scurlock

Get involved with KREIA. You can help with the monthly meetings, L.O.T.S. program, this newsletter, Saturday workshops, Government Affairs roundups, marketing, the KREIA website and more. PLUS You Get EXTRA KREIA points for everything you do!

Ask for someone to direct you as you check in at the front desk at monthly meetings.

KREIA's newsletter is published monthly and serves both to educate and to remind you of upcoming monthly meetings.

About KREIA: The Kentuckiana Real Estate Investors Association is a members-only, nonprofit organization focused on education, networking and resources for today's investor. 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. Group discounts are available.

Contact us at News@KREIA.com if you want to: Advertise on KREIA.com • Sponsor a monthly meeting Sponsor a L.O.T.S. program • Sponsor Saturday Workshops

Bronze Membership . . . . . . . . . . . . . $499 Includes free admission to monthly meetings for one person.

Silver Membership . . . . . . . . . . . . . . $699 Includes free admission to monthly meetings for two people.

Gold Membership . . . . . . . . . . . . . . . $999 Includes free admission to monthly meetings for two people and gives you a skirted table in the vendors area.

Platinum Membership . . . . . . . . . . $4,995 Includes everything the Gold level offers, plus extra promotion from KREIA. You'll be our designated events sponsor, and we will promote you accordingly!

New ½-page sponsorship levels and pricing are in effect for new member signups and upon renewal for current sponsors.

Questions? Send email to News@KREIA.com or catch up with KREIA Sponsor Chair Dennis Erhard at the meetings.

Join KREIA Joining KREIA is easy: Go to KREIA.com and click the "JOIN" option on the menu.

The cost to join as an individual member remains at $125 per year, with a charge of $20 at the door for monthly meetings.

Click JOIN at KREIA.com to find out about all the benefits of membership for both individuals and businesses. Too many to list here!

Copyright MMXVII 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 to Rehab Houses for FAT Cash Local house flippers share profitable tips at Aug. 24's main meeting During last month’s meeting, I asked how many people wanted to create enough passive income to support their lifestyle. Unsurprisingly, nearly every hand went up. We spent the rest of the meeting as well as the entire day on Saturday talking about the passive (owning) and active (managing) aspects of using real estate to accomplish this goal. Hank, Clay, Dennis, Darin Erik Hitzelberger and I sincerely hope everyone learned a lot.

As I talk to potential clients, students and investors, one of the most common limiting beliefs I run across is that acquiring properties is too challenging. We must remember investors should focus on asking “How do I?” rather than stating, “I can't.” The most straightforward answer to the question is to generate more money.

Clay Rehabbing houses is my favorite way to do this.

Smith This month Clay Smith, Eric George, Frank Miller and I will be talking about this exact topic. We will cover everything from how to get started to estimating costs to dealing with contractors to environmental and legal challenges. In addition, we will show real projects from right here in Louisville.

I encourage you to make the investment in yourself Eric both Thursday night and Saturday if you are interested George in learning how to successfully rehab houses. This is true whether you want to use the profits to invest in passive income, pay off debt or to splurge on a vacation or new toys! I look forward to seeing you then.

Erik Hitzelberger Vice President

Topics We'll Cover • • • • • •

How and why to get started rehabbing houses Secrets to taking your business to the next level Estimating repairs and hiring contractors Managing large projects Environmental concerns and how to avoid them Louisville-based case studies

Main meeting starts at 7 p.m.!

Buffet line opens at 6.

Frank Miller

How to Keep Your Contractors on the Job

By Mike Fallot, Mortgage Man LLC One of the lingering effects of the housing crisis from a decade ago is a shortage of skilled and dependable contractors. The surging housing market, fueled by low inventory, an improving economy, and an influx of new investors makes this problem particularly acute for rehab investors. Contractor “fatigue” is an issue we see with many of our borrowers as they deal with this challenge.

Savvy investors we know are adjusting their business to address this new reality. Here are some of their strategies and practices: Pay More: Competition is fierce, particularly for licensed trades that serve investors, consumers and businesses. Chances are your contractors have plenty of inquiries from your competitors – make sure the prices you negotiate are sufficient to keep your contractor committed to finishing your job and meeting your schedule. Project delays due to contractor no-shows are an increasing problem. Higher holding costs and re-work often far outweigh the increased cost needed to secure reliable skilled contractors.

Structure for Success: Always use a detailed, written scope of work and a written contract that protects you.

(Continued on next page)

Interested in ‘flipping’ houses for cash?

Sign up for August 26th's Saturday Session!

Can you really make $20K or $50K or more rehabbing houses around Louisville, like they show on TV? YES, you can! And with less drama, too. Our pros lay it all out for you in this 6-hour workshop, with a rehab open house! It begins at 9 a.m. at the Home of the Innocents, 1100 E. Market St., in the basement of the Hockensmith Building.

Member Cost: $99 Non-Member Cost: $199

Sign up now at kreia.com!

5:30 p.m. Early Meeting: SurePoint Equity

Active Members: $20 • Guests: $30 • Former Members: $30 Receipt Auto-Emailed to You for Your Records

Have you found a great house to flip but need help with funding?

SurePoint Equity is one place you can turn. The company has made loans to many KREIA members for their rehab projects.

Copyright MMXVII 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 KREIA Members!

Steven Brown Al Edwards Michael Faurest Philip Forrest Tim Hildebrandt Jay Leisten

David Miesner Chandler Morris Luke Neubauer Keith OLoane Ryan Pogue Scott Ramser

David Remkes Katie Spalding Greg Taylor Pamela Waddle Patrick (Rick) Walsh

ISC Provides 4 simple yet powerful tools, backed by Private Investigators, to make screening and managing your ideal tenants easier than ever!

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New, Local Real Estate Mentoring Frank Miller, KREIA’s immediate past president, is one of the most successful wholesalers and rehabbers in our market, and he remains committed to KREIA’s mandate of education.

Beginning next month, Frank is going to lead a 6-month workshop designed to hand-hold new investors through their first deals and on their way to 6-figure income. For seasoned investors, Frank plans to help them polish their skills. A mentor will do a deal with each student.

There will be classroom training and webinars, and students will join him on ride-alongs and door-knocking field trips.

Frank said the inspiration for Believe Investment Group and this class came about as new investors approached him seeking help.

He also remembered an investing beginner who dropped out of KREIA after spending more than $50,000 in real estate training, yet never bought her first investment property. He said he doesn’t want that to happen to anyone else.

Frank said he’s looking for students who are willing to commit to the full six months and do the work, adding that their first deal could more than repay the cost of mentoring.

At KREIA’s August meeting, Frank will unveil his plans and discuss pricing. And he said if you sign up for his mentoring program and KREIA’s Saturday workshop, he will pay for half your Saturday workshop fee. He’ll be teaching there too.

(Contractors: Continued from Page 3) Phases of work should be clearly outlined with expected completion dates. Change orders should be written and agreed to.

Payments should be based on completion of milestones (i.e., demo, framing, paint, etc.) that are well defined and simple to verify. Many contractors are not skilled at billing – investors often have to take the lead here and can use the opportunity to educate and build trust. Be prepared to deviate from the payment schedule to keep the project moving, but investors should always know how far ahead a contractor is in payment versus performance.

Permits: Know and understand permit requirements reason-ably well, so you are well equipped to navigate the “gray zones.”

Always get permits when clearly required to, and never solely rely on an unlicensed contractor’s advice regarding permits – particularly when they say a permit is not required.

Inspect, Verify and Adjust: Frequent inspections and dialogue with your contractor regarding work quality and schedule are critical. If you don’t have the expertise to discern quality of work, consider asking a more experienced investor for help (there are plenty in KREIA). Keep in mind that rehab contract-ing work can be challenging due to the inevitable surprises and unknowns.

Build a healthy contingency into your budget – and don’t expect your contractor to absorb these excess costs. Understand that small contractors have difficult jobs, and investors who make their life easier (pay on time, provide regular work, offer good dialogue, etc.) also increase their probability of a successful project.

Copyright MMXVII 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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(502) 451-2600

Copyright MMXVII 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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Section 8: ‘It’s Still Ugly for Landlords’ Report from Aug. 3 HUD meeting

By Mike Butler Special thanks to Rue McFarland, JD Carey (Executive Director of Louisville Apt. Assn.) and George Foree, who joined me for a special meeting with HUD Leadership: Frank McNeil (HUD Public Housing Revitalization Specialist), Carol Spencer (Director HUD), Tim Barry (Executive Director of LMHA), Robert Kirchdorfer (Director IPL), Mark Roseberry (Customer Service Ombudsman) and Lisa Osanka (HUD Section 8 specialist).

This was the best meeting yet for addressing concerns of landlords and property managers on the Section 8 program.

I began by stating that the HUD, IPL and Section 8 programs have, from our perspective, within the last two years transitioned into anti-landlord and anti-property manager campaigns.

We informed HUD leadership that many landlords and property managers are no longer participating in Section 8 due to the tremendous headache factor, anti-landlord attitude, and outrageous and insane inspections resulting in two months of lost rent when accepting a new resident on Section 8.

Rue McFarland, for the third time, invited Robert Kirchdorfer to prepare a landlord-friendly list of the 12 most frequent violations causing failed Inspections. Kirchdorfer has agreed.

We gave some perspective from families who are supposed benefit from Section 8: When anti-landlord actions force landlords and property managers to abandon the program, this hurts those families, who get uprooted and forced to move if they are to stay within the program. HUD’s actions are causing harm to the very households its mission statement is supposed to support.

Rue told everyone while he has been participating in the Section 8 program since the 1980’s (yes, the previous century), as of June 2017 he is not participating anymore. Rue pointed out dirty bathtubs are now an owner responsibility on an annual renewal inspection violation. Frank McNeil chimed in, “Yes, this is ultimately an owner responsibility.”

Rue also pointed out after landlords fixed issues that caused them to fail an initial inspection, inspectors came back and dinged them with new violations not included on their original report. When inspectors do this, it can cause two months or more of lost rent. HUD officials acknowledged this is an issue and said they will see if it is legal for them to simply verify the original violations have been corrected properly.

Rue described how an established, well-respected, long-time investor purchased a house and invested over $20,000 just on renovations. The initial inspection FAILED because the inspector found a small crack next to the dryer vent on the outside of the house. FAILED. No rent until after the next re-inspection. Insane.

This kind of action is very anti-landlord.

George Foree agreed with Rue and me and added he had recently failed an inspection on a single-family house due to one light bulb burned out.

George also expressed frustration on recently installing a new

replacement furnace legally and properly with all permits required. The inspector failed his unit because the furnace did not have a sticker from the city inspector. George said he did everything by the book, but because the City of Louisville inspector lagged on the final inspection, he got penalized.

Inspectors have computers in their vehicles, and this inspector could have pushed a couple of buttons to see that the permit was properly obtained.

What is the reason behind this recent anti-landlord sentiment? It was expressed to us that HUD is on this aggressive campaign due to slumlords in Louisville. It is a shame that all of the good landlords and families are getting penalized because of a few bad apples.

Rue asked Tim Barry if he had any numbers on vouchers and waiting lists. Tim said that HUD funds 10,000 vouchers in Louisville. This means we have 10,000 households on Section 8.

Tim also pointed out there are over 14,000 households on the waiting list here, and that Indianapolis has over 40,000 folks on its waiting list.

Of special note, we have heard stories and rumors about LMHA going through some kind of audit from HUD in Washington, D.C. Carol Spencer and Frank McNeil explained in detail to clear up these rumors.

The Office of the Inspector General — “OIG,” the law enforcement arm of Federal Government — has many departments to inspect, review, enforce and to criminally prosecute agency leaders. Their powers include being able to arrest leaders of government agencies who do not follow rules or who commit fraud in using federal funds for their programs.

The rumors were the result of the OIG conducting audits and inspections of our local LMHA. Many of us experienced “random” inspections due to these OIG inspectors.

Our local HUD leaders anxiously await the “Final Report from OIG,” which should be posted on LMHA’s website by August 8th.

UPDATE: August 14, 2017 – The OIG Final Report has been released. Please visit link below to view this report. You’ll see why things will be getting uglier for landlords on Section 8 program: facebook.com/groups/LouisvilleLandlordsLoveSection8/ Any Results From This Meeting?

We think this is by far the best meeting yet, although the big picture is still very ugly for landlords, and myself and Rue McFarland will continue to not participate in the Section 8 program. It is sad because we all have very good residents on the Section 8 program. The LMHA new rules make it absolutely (Continued on Page 19)

Copyright MMXVII 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 MMXVII 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 MMXVII 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 MMXVII 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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photo by bruce w. hinson www.obedientcamera.com Hank Schildknecht swears in newly elected and reelected KREIA officials.

Last month's focus on building wealth with rentals kept everyone's attention.

KREIA Photos

Insurance for the Real Estate Investor realprotect.com

Incoming President Eric George accepts the gavel of power.

See more photos online — in color — in KREIA's private Facebook group.

Copyright MMXVII 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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PRP L.O.T.S. Home: A Closer Look Darin O’Neil begins rehab on lease-option house Darin O’Neil wants monthly checks coming in like clockwork, but he doesn’t want tenants blowing up his phone with problems. He likes cash flow from rentals but makes no bones about disliking the management hassles of tenants and toilets.

Darin finds the sweet spot between high cash flow and low maintenance by offering housing under the strategy of lease with option to purchase.

He calls it “walk-away income.” photo by bruce w. hinson At the last L.O.T.S. meeting, Darin was in www.obedientcamera.com the beginning stages of renovating the house on Mapleview Drive in PRP, preparing it Darin O’Neil addressed KREIA members from the porch of his rehab house at 8811 to sell to a future tenant buyer under a lease Mapleview Drive. (Photo by Bruce Hinson) with option to purchase.

Wait, what? Sell to a tenant?

Whatever their reasons, these tenant buyers are willing to Under a lease with option to purchase, tenants sign a pay the option fee to lock down the house. typical rental lease, but they also pay a non-refundable Because tenant buyers see themselves as the eventual option fee for the privilege of the option to buy the house owners of the house, they usually take better care of it. And at a set price within a set period of time. Darin says his as potential future owners, they assume responsibility for option fee is usually 3%. For this house, that’d amount to most maintenance issues -- which keeps them from ringing up about $5,000.

Darin every time the toilet gets stopped up.

“It does require the tenant to come to the closing table “It’s a good deal for me,” Darin said, “because my interest with their option fee, first month’s rent, and their usual is just to turn the maintenance over to a responsible person double security deposit, or $6,000 to $8,000,” Darin said. who has a checking account and a decent job.” And it will That's a bigger chunk of change than most tenants need probably crank out cash flow for years, because most tenant to move into a house. buyers usually never exercise their option to purchase.

Someone at L.O.T.S. asked him if people out there really This had been a hoarder house, and Darin said the inability have that kind of money. "Yes, there are people out there to inspect the parts of the house the junk was hiding caused who have money,” he said. him to underestimate the rehab. His $36,000 budget He described tenant buyers as people who want to buy ballooned another $20,000. a house but, for whatever reason, can’t or don’t want to buy a house right now. Maybe they have credit issues and THE NUMBERS plan to pull the trigger once they’ve Acquisition Cost: $63,200 repaired their credit and a bank will Estimated Rehab: $56,000 finance them. Maybe they’re trying Estimated ARV: $145,000 out the neighborhood. Maybe Cash into the Deal: $17,880 they’re attached to the house and Estimated Rent: $1,295 don’t want to lose it.

Estimated PITI: $710 Darin says that to attract a lease Estimated Gross Profit: $585 monthly, $7,020 annual option tenant, you must rehab the Cash-on-cash return: 39% ($7,020/$17,880) house a cut above the typical rental. Lease Option Selling Price: $160,000 “I’m going to put in granite counterFind more photos online in KREIA’s private Facebook group. tops, undercounter lighting, backDarin O’Neil (Photo by splash, all the bells and whistles,” he Why is it called “L.O.T.S.”? Because we Learn On The Site!

Lauren Willoughby) said.

Copyright MMXVII 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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10 Mistakes I Made on My First Flip And why I can’t wait to do it again!

By Nina Musgrave, KREIA Member & Volunteer Some have visions of sugar plums. I have always had visions of flipping houses. Maybe it’s my background in a family of tradesmen/women. Or maybe I simply like paint colors. Whatever the reason, it came true over the past six months. The purchase closing date was February 3, 2017, and I am proud to say that as I write this, the property is under contract! During the process of rehabbing this house, I willingly enrolled in House Flipping University. I know I will be a student as long as I am in real estate investing.

I am tremendously appreciative of KREIA and the contacts I have made here. It’s more than coming to monthly meetings and taking notes for me. Volunteering and giving back has helped in countless ways. For example, a few experienced investors visited the property before and during construction.

I thought certain issues would be insurmountable – like disgusting smoke. My best solution at that time was to put in the rent ad “Smokers welcome.” Of course, they had other suggestions – with trusted contacts and phone numbers to call. They prevented me from making several mistakes. Some of them I made on my own accord:

10 Mistakes I Made on My First Flip: 1. Completely underbudgeted. BUT the property was bought at a low enough price to still profit.

2. Using sun-beaten, old, flaking paint from the garage door, opposed to un-faded exterior metal trimming, to match paint. The shade was a tad off, to say the least.

3. On that note – a quart of paint goes a lot farther than I ever knew. I purchased a couple of gallons where I could have easily gotten by with quarts.

4. Pressure wash first, instead of last. This will brighten up the outside. I have no logic for this, other than psychologically.

5. I called the plumbers first, and the house needed a repipe. They were patient and kind, and definitely on-site way too early.

6. Check in with your contractor on permits and status. That is all.

7. Buy new closet shelves instead of repainting old ones.

8. Replace all exterior doors. We only replaced the back door. The front door looked out of place after the house was transformed.

(Continued on Page 22)

Copyright MMXVII 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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Call 888-445-FLIP or visit us online at www.surepointequity.com Copyright MMXVII 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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Ask Hampton: ‘If I were starting over…’

By Hampton Scurlock I’ve been asked to write a column and want to introduce myself. I’ve been investing since 1998 and started my former career as a financial advisor (and tax preparer) about the same time. I’ve had experience with all types of investments, and my background has proven to me that real estate has advantages other investments simply can’t match. Also, as a tax preparer for investors, I saw firsthand real estate’s many tax benefits. Real estate investing has been great for my family, and I’m always eager to share my knowledge and mentor others.

How did you get started in real estate?

I started buying cheap, single-family houses and slowly built up a portfolio. Now I focus more on rehab/flips and wholesaling. Initially I’d buy a house or two, let the cash build up, then buy another and just repeat the process.

If you had to start over in real estate, how would you do it?

I would start with wholesaling, then add rentals and rehabbing/flipping. This would allow me to receive chunks of cash rather than the bits of income that came in each month from rentals. Those big chunks could be used to purchase more rental houses or increase the size of my retirement

accounts earlier. Wholesaling isn’t easy, but it is simple. You find a deal on a house and put it under contract, then you sell the contract to a cash buyer like me for a quick profit. It can be a great way to generate chunks of cash for you or your retirement/education/health savings accounts. You may also start wholesaling with little to no money. Wholesaling can allow you to find deals on houses you want to keep as rentals, or fund your rehabs.

Please send me your questions or topics you’d like me to cover. Just remember I’m giving opinions and I’m not always 100 percent correct (just ask my wife). I look forward to your feedback, questions and suggestions for future columns.

Thank you.

Now go make a deal!

Hampton was an award-winning financial planner and tax preparer before going into real estate full-time. He is president of 694best.com and is always looking for deals/houses to buy in and around Louisville. Please text (502) 694-BEST (2378) if you have a question or topic for Hampton.

The preceding is not personalized investment, legal, or tax advice. Hire a professional for those matters regarding your personal situation.

Copyright MMXVII 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 MMXVII 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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Why You Need a Marketing Plan How to get more leads, do more deals and make more money

By Sharon Vornholt not my only source of leads. Think of it this way; if you have 5 We all want to learn how to get more leads, main buckets, leads coming from your lead-generating find more deals and make more money. The machine might look something like this: secret to accomplishing that is marketing. You Most Used: Less Used: need have a clear, concise marketing plan that • Direct mail • Driving for dollars you implement consistently.

• Websites/organic search • PPC (Pay per click) ads That sounds pretty simple, doesn't it? I can tell you that it • Networking • Craigslist and IFTTT is (at least on the surface). Where most people get tripped up • MLS • Calling FSBOs or expired listings is on the "consistent implementation" of their plan. They • Commissioner's sale • Code violations don't have a plan for getting it all done.

Let's break this process down a little bit.

Understand that this is just an example. Your 3 to 5 main lead channels might be different, and therefore your How to Get More Leads marketing plan might look quite different from mine.

You need to have multiple lead channels or ways to get leads in the door. How many do you need? I recommend that Your Goals Fuel Your Marketing Plan you have at least 3 to 5 that you use consistently. If you have Now let's look at what your goals might be for the several, when one source stops producing, you have other upcoming year. lead channels in place. It helps to end the feast-or-famine If you want to do 2 deals a month over the next 12 months cycle when it comes to leads.

(24 deals), understand that it takes a while for momentum to The problem with this very simple answer is that you need build with any marketing plan. This is especially true for a plan to stay on track. In order to do anything consistently, direct mail, where 81% of your deals will come at or beyond most of us need a little the 5th mailing. Does this mean you won't get a deal for 5 prompting. I use a big months from direct mail? wall calendar to keep No it doesn't. It just means that it takes that long to get everything moving real momentum. Direct mail is the only way to get most offsmoothly. I know this market deals like probates, and it has always been my #1 seems a little old source of leads. school, but I can tell you that it works. I have a Building Your Marketing Machine big wall calendar in You need to get your marketing machine running perfectly addition to my online so it will keep your phone ringing week after week, month calendar. Why is this so important? after month. To do this, you need a plan, you need systems, That calendar is my daily accountability partner. I can't and you need to schedule those marketing activities so they forget about things I need to do if they are staring me in the are consistently implemented. This is how you build a face every day. marketing machine.

Some of your deals should be coming from each one of More Leads = More Deals those 3 to 5 lead channels or buckets to meet your total It really is that simple. Real estate is a numbers game. number of closed transactions needed to meet your goal.

Make no mistake: you have to "kiss a lot of frogs" to find the So how many will come from each "bucket"? That depends prince, as the saying goes. entirely on how much time and money you devote to each You will talk to a lot of sellers whose situation won't work one of them. When it comes to marketing, you either have to for you, whether they just want too much for the house, they spend your time or your money. owe too much on the house for it to be a viable deal for you, If you are short on cash, you will need to invest more time or one of a number of other reasons. on marketing and free strategies. If the reverse is true and When that happens you just have to move onto the next you have some extra cash but not a lot of time, outsource as person. There is always another deal if you have your leadmuch as you can with the extra cash you can put into your generation machine working for you. business. Direct mail is one of the easiest things to outsource.

Direct mail has always been my #1 source of leads, but it is (Continued on Page 19) Copyright MMXVII 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 MMXVII 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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Property Medic New to house flipping? Need a diagnosis on a prospective rehab house? Do a walkthrough with Jeff Colgate — he can help you write a scope of work for the contractor you end up hiring.

JC4PropertyMedic@gmail.com

(502) 645-4375

Copyright MMXVII 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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(HUD Meeting Report: Continued from Page 6)

(Marketing Plan: Continued from Page 16)

impossible to participate in this program originally designed to help families.

I proposed with Tim Barry setting up a new “Landlord Orientation” training session before a landlord can participate in the Section 8 program. (Households are required to attend a two-hour briefing before they get their packet to go shopping. Why not communicate expectations to landlords, as well?) This seemed to go over well with everyone. They may also beef up landlord information on their website.

I also recommended some kind of program for wellestablished landlords with proven track records.

In closing this meeting, it was decided to wait until after the final report from OIG has been released. We will schedule another meeting at that time.

Make More Money and Finally Get Out of 'Overwhelm' with a Marketing Plan If you have a strong marketing plan that you implement consistently, everything will fall into place. But here's the thing: you need to get all the pieces right. There is a method to the madness, as they say.

If you're like most people and you have no idea where to begin, I have a solution for that problem.

Join Bill Walston and me in Nashville for our next "REI Marketing Mastery" event, August 5th and 6th, 2017 (http://reimarketingmastery.com/). This is a great 2-day, small-group event, and you will walk away from it with a marketing plan for your own business.

If you have questions, send me an email at sharon.vornholt@gmail.com or reach out to me at the Louisville Gals Real Estate Blog, and I will be happy to get those answered.

To get more updates, please join the PRIVATE FaceBook Group “Louisville Landlords Love Section 8,” a group Mike Butler has set up for area landlords and property managers to share their experiences dealing with HUD. Visit MikeButler.com for real estate training: He offers free webinars every Tuesday at noon.

KREIA member Sharon Vornholt is a local wholesaler with a national presence. The articles and podcast interviews at her website provide a real estate education on their own.

Copyright MMXVII 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 MMXVII 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 MMXVII 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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(10 Mistakes: Continued from Page 12) 9. Make sure the bathroom vanity door opens in the best direction for the space. (Small bathroom) 10. Install a dishwasher and plan for appliances. We spent a few hours looking for odd-sized stove and fridge because the typical sizes wouldn’t work well.

One Bonus Mistake Make your scope of work as detailed as possible.

Specifically define your responsibilities and the outside responsibilities.

With all of that being said – I cannot wait to start the next flip! With each property, there will be lessons to learn.

Honestly, that is one of the main reasons I love real estate investing. – Nina

QUOTABLE QUOTE

“If you really want to do something, you'll find a way. If you don't, you'll find an excuse.”

— Jim Rohn

Copyright MMXVII 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 MMXVII 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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Upcoming Events Rehabbing for Fat Cash!

Future Events Invest With Your Self-Directed IRA

Interested in “flipping houses” for cash? This meeting is for you! Local KREIA members will show their tips and tricks for getting it done right. Thursday, Aug. 24.  Saturday Workshop, August 26  August 29 — noon-1 p.m. L.O.T.S. event. Location TBD. Check your email. Lunch is provided for KREIA members.  September 5 — 11:30-1 p.m. Louisville Lunch. Location TBD. Check the private Facebook group. You buy your own lunch. Ed Gibson is the organizer.  September 13 — 11:45 a.m.-1:30 p.m. KREIA Indiana Sub-Group Luncheon Meeting. Meets the 2nd Wednesday each month at Tucker’s Restaurant in New Albany on State Street and I-265. Open to all, but you buy your own lunch.

Brian Haeseley chairs.

Folks from Equity Trust, one of the most trusted custodians, show how to invest tax-free. Thursday, Sept. 28.  Saturday Workshop, led by Equity Trust, Sept. 30.

How to Buy REOs Local experts talk about how they buy foreclosed properties from banks and at auction. Thursday, Oct. 26.  Saturday Workshop, Oct. 28.

Holiday Party We're planning it now!

Thursday, Nov. 16.

"KREIA advertising is by far, hands down, the absolute best advertising dollar ever spent for Borders & Borders!"

Harry Borders Attorney Borders & Borders, PLC

PRE-Pay Now at KREIA.com to Qualify for a Big Door Prize Drawing!