February 2018 KREIA Newsletter

Providing Education, Resources & Networking Since 1978 Kentucky’s premier investment club for landlords, rehabbers and wholesalers Meeting the 4th Thursday of every month (except November & December) KREIA.COM • facebook.com/groups/kreiaky • twitter.com/reiaky

Monthly Newsletter for KREIA Members

Vol 02-18 February 2018

President’s Letter

1

Sponsorship Rates

2

Tax Changes: CPA Mike 3 Grinnan explains new rules in this month’s main meeting

Welcome, New Members!

We had an outstanding kick-off to 2018 with around 250 people in attendance last month to learn about wholesaling and marketing for fast cash! The Saturday workshop that followed was PACKED with 60 eager investors ready to learn from three of the best local wholesalers in our market, Frank Miller, Sharon Vornholt, and Hampton Scurlock!

Eric George

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March Meeting Preview: Three rockstar landlords will school us on rental property

4

Accounting We Will Go: How to get free training on QuickBooks

4

Nina Musgrave: Five ways to organize paper trails

6

Member Spotlight: Gene Stein

8

KREIA Photos

KREIA Members!

12

L.O.T.S.: Eric George rehabs last 13 year’s workshop house in South Louisville Mike Butler: Here’s a system that makes tax time a breeze!

16

Rick Littrell: Update from the first Membership Committee meeting

21

Government Affairs Report

21

Upcoming KREIA Events

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This month is a SUPER IMPORTANT meeting to attend, as there are BIG CHANGES in the new tax laws that CPA Mike Grinnan is going to lay out for you!

Nobody likes doing taxes or preparing for them, but the info you gain in this month’s meeting could literally be the difference in you making tens of thousands more dollars in 2018. Grab a friend or spouse and make sure you get a seat early, as there are lots of new tax laws to learn!

Lastly, please remember that KREIA is completely run by volunteers for the benefit of all members to learn from, network with, and educate one another.

Without our members and volunteers, KREIA could not exist. Big thanks to all our volunteers for helping everyone get through the front door as quickly as possible and helping spread the word about KREIA! If you’d like to give back to KREIA and volunteer in any way, please contact Rick Littrell (Membership Committee Chair) at DerbyCity@Littrell.biz!

Eric George KREIA President

Copyright MMXVIII 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. Admission 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 MMXVIII 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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Will New Tax Rules Help or Hurt Investors?

CPA Mike Grinnan breaks them down for us at Feb. 22 main meeting Time is rapidly approaching to file your taxes for 2017, and maybe you’re concerned because you’ve heard rumblings about big changes coming to the tax code as a result of the Tax Cuts and Jobs Act President Trump signed into law in December.

The first thing you need to know is that it doesn’t affect your filings for the Tuesday, April 17, deadline on 2017’s taxes. But the big thing you need to know is that it will for 2018, and that the time to start thinking about adjusting your tax strategies going forward is now.

CPA and KREIA board member Mike Grinnan will take the microphone at this month’s main meeting to explain what has changed and what the ramifications will be for real estate investors and small business owners.

We caught up with Mike to talk about investors’ tax situation both this year and next. “If you’re a real estate professional, there are certain elections that need to be with your return.

It could be a key point in whether or not you get a deduction,” he said.

“On the rental side, we’re going to look at mortgage interest deductions and some areas where, if you’re not careful, you could lose your interest deduction.”

He’ll be addressing those topics at the main meeting, so you’ll want to be in your chair by 7 p.m. to hear about that — and about what’s coming down the pike for your 2018 tax filing.

And if you’ve got questions — bring them. Mike said he’ll take questions from the audience during the meeting and also later at the bar.

• Here’s an early preview from Mike on what to expect under the new tax law: Looking forward, and having a chance to plan for 2018, we’ve got some significant changes. Some are good and some are bad. When I look at people’s taxes for ‘17, I see some things that will increase their taxable income and some that will decrease it.

People are going to lose their personal exemptions, which are over $4,000 each, and then they’re going to gain about $12,000 in the standard deduction. So, depending on how large the family size is, some people will pay a little more.

There are some other significant changes that could make a big difference for small businesses, including certain real estate investors, who are going to be eligible for Section 199A deduction, which is a 20%-of-profit deduction that they’ve never had before. So if somebody had a $100,000 profit from their business, they would be entitled to a $20,000 deduction against that profit.

Right now we’re looking at it for rental real estate people, and they’re saying — we’re not 100% sure because the IRS has not come out with regs or determination or tax forms — that your regular real estate investor will not be eligible for this 20% deduction. But a real estate professional would be. We’re looking forward to this deduction. It could lower some taxes.

We’ve also got the lowering of the tax rate, which will help some people save on taxes. I just completed a tax return for a family of three — husband, wife and one child — having a combined income of $100,000. For 2018, using the same numbers as 2017, they’ll pay $2,300 less in income tax. So that’s almost $200 a month more in their pocket under the new tax law.

There’s no one-size-fits-all for determining whether you’re going to pay more or pay less. Some of it is the income, some of it is the current deductions you have. Each person’s situation will be a little different. But we do have lower tax rates and a higher standard deduction, which should benefit people.

(Continued on Page 11)

5:30 p.m. Early Meeting: Bruce Hinson on taking great real-estate photos Special Door Prize for Pre-Paid Registrations!

Active Members: $20 • Guests: $30 • Former Members: $30 Register now at kreia.com. Receipt emailed for your records.

PRE-PAY NOW!

Photographer Bruce Hinson will put his camera down for half an hour to talk about how to take photos of rental houses and flip properties that make people take notice.

Copyright MMXVIII 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!

Jim Beavers Ideisha Bellamy Norm Biller Robbie Brown Matt Carroll Jim Cicchiello Jennifer Cress James Davila John Douglas Karin Eldridge David Essa Clayton Farris John Geary

Kevin Harris Kathleen Helm Brett Holton Kevin Kern Sara LeGaspi Josh Lindley Troy Luster Deborah McCann Kristine McKinney Eric Mefford John Murphy Sarah Nichols Brian O’Rear

Jackie Phillips David Rathke Robert Raymond Ronald Scherer John Sullivan Charlotte Thacker Loretta Varda Mike Watts Jason West Eric Yarbrough Jacqueline Zepeda

Next Month’s Main Meeting:

Building Wealth With Rentals Want to learn about landlording from three major players in our market? Mike Butler, Erik Hitzelberger and Clay Smith are on next month’s panel to get you up to speed on managing tenants, increasing cash flow, and using systems to save time.

Mike Butler wrote the book – literally – on landlording (see the bestseller Landlording on Autopilot), maintains an impressive portfolio and has a property management business. Erik Hitzelberger owns the largest turnkey rental business in Kentuckiana, rehabbing dozens of houses each year. Clay Smith oversees a growing portfolio, has a property management business, and also runs a contracting business. Whether you’re new and just thinking about rental property or you’re an old hand needing a tune-up, you can’t miss this meeting on March 22nd!

Plus, there’s a workshop!

Mike, Erik and Clay will spend a day expanding on what they teach on Thursday about rental property, plus offer all the tips they couldn’t squeeze in then.  When: Saturday, March 24th, starting at 9 a.m.  Where: Check back later – we’re working on a location.  Cost: $99 for members and $199 for non-members.

Early Bird Pricing! You can save $20. Pay $79 instead of $99! And $179 instead of $199! Just register before midnight on March 22nd.

Free QuickBooks Training Now that tax time is here, you’ll be hearing a lot about the accounting software called QuickBooks. Want to take a free class that’ll teach you how to use it? If you have a Louisville Free Public Library card, go to the library’s website (lfpl.org) and, from the home-page, click the link to Lynda.com.

Log in with your library credentials and check out more than 6,000 online classes on tons of topics – including QuickBooks. Without your library pass, you’d have to pay $20 to $30 a month for access to Lynda.com.

Copyright MMXVIII 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 MMXVIII 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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Five Ways to Organize Paper Trails

By Nina Musgrave The success of any business depends on creating and maintaining an effective record keeping system. Based on January’s newsletter, my paper trail chaos from last year is no secret. I intend to reduce the number of missing documents for 2018.

After researching various blogs and online articles, here are five ways I’m changing course.

1. Reorganizing and renaming hard drive files In the beginning, documents went into (spontaneously created) property folders on different hard drives. Sharing and restructuring these into a consistent hierarchy limits confusion and saves search time. Bank statements and other incoming PDFs now go into their appropriate place.

2. Registering with Unroll.me My inboxes overflowed with newsletters and emails from companies all over the world. Unroll.me allows you to unsubscribe from those you no longer want (and possibly never signed up for). The email lists you choose to stay on will “roll up” into one email, from one sender – Unroll.me.

Immediate inbox makeover. Thank you.

3. Utilizing Google Drive Multiple versions of a file can make one doubt her sanity.

Updating issues with Dropbox forced a switch to Google

Docs and Sheets. I love watching parts of a file change right before my eyes as someone, often on another island, edits it. Knowing I’m using the most current version of marketing collateral and property analysis is delightful as well.

4. Setting up CentrIQ information On my quest for useful apps, I ran into CentrIQ. Enter information for an appliance or system, and their database pulls user manuals, model and serial numbers, key replacement parts and “how to” videos – and puts it in one online account. No more conversations of “What refrigerator did we put in that house?” You can include paint colors and photos of the rewiring for future reference. CentrIQ removes mystery for potential buyers because warranty information is transparent. You can create an account for yourself and also for people buying homes you’ve stocked with appliances, so they will always have that information.

5. Trying the Shoeboxed app & physical folders for receipts This dual system, along with signing up for email receipts from stores, will eliminate those late reprint requests.

Receipt images work, even if it’s a quick photo, and if that step is forgotten, monthly folders are set up and accessible.

Of course, this system will evolve and adjust with experience and time. For me, the important thing is that I’m working on a solution. Remaining flexible is key, and I have vowed to keep my habit of perfectionism at bay!

Copyright MMXVIII 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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www.surepointequity.com Copyright MMXVIII 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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Gene Stein E-mail: genepstein@yahoo.com Phone: (502) 627-0024 Company Name: Odyssey Group, LLC City You Grew Up In: Louisville College: University of Kentucky Current or Previous Occupation: I own and operate a wholesale mattress s and furniture business in Louisville. I'm a rookie in real estate investing, but I'm hungry, driven and focused on building a real estate empire in order to leave a legacy for my awesome kids. They have no interest in the furniture business. And I'm OK with that!

Haha Hobbies, Passions, and Fun: I'm passionate about my kids and my family, my business, and learning more about real estate investing. Who has time for hobbies??? My duty as a Dad along with my responsibility and obligation to be successful is what I consider fun. Let's have some fun!

KREIA Member Since: Yesterday! January 2018 Why Did You Join KREIA? I joined KREIA so that I could learn more about real estate investing from people who are actually doing it.

Why Are You a KREIA Member? To learn as much as I can as quickly as I can. I want to get to a point where I can contribute in any way I can to the greater good of the association.

Year You Began Investing: 2000 Real Estate Investing Preferences: I will start as a wholesaler and build my business toward fix and flips.

Then I will fix and hold and, ultimately, become a hard money lender to the next generation of investors.

What Lessons Have You Learned in Real Estate? Like any business, leads are the lifeblood, and marketing is the key. With the right marketing, and hard work, there's no limit to what I can achieve.

Your Top Tips for Investors: 1. Don't skimp on marketing. 2. ANSWER YOUR PHONE. 3. Follow up. 4.

BE OBSESSED. Any Skills or Resources to Benefit KREIA Members? I own and operate a wholesale mattress and furniture business. I can be a great resource for staging properties or landlords who offer furnished properties in Louisville and the surrounding counties.

Copyright MMXVIII 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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Join us! Classes begin in March

Copyright MMXVIII 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 MMXVIII 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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(New Tax Rules: Continued from Page 3) There will be fewer people doing itemized deductions on federal. What I’m telling my clients is that even though on a joint return where there’s a $24,000 standard deduction, those standard deductions include your state taxes (which are now capped at $10,000), your charitable contributions, your mortgage interest, and some miscellaneous itemized deductions. Some of those are going away.

You might be tempted not to bother to keep track of your itemized deductions if you don’t meet $24,000. However, you still need to because in Kentucky the standard deduction is only $650 — you’ll get them on your state income tax return.

The state has not adapted to new tax law.

Here’s a problem we run into when clients approach us about things they’ve heard on the Internet. There were things in the House bill and different things in the Senate bill, and there’s still a lot of information out there based on those two different bills. What got passed is what we’ve got to go by — what is the law.

There was confusion about home mortgage interest deductions and sale of your personal residence. Those rules have changed. But they did not change as far as selling your home. You still have to live there two out of the last five years to be excluded from capital gains tax — but they were looking at requiring you to have to live there the last five years.

QUICK Q&A WITH MIKE GRINNAN What drives CPAs crazy?

The joke is always the shoebox full of receipts.

People actually do that?

Yeah.

What kinds of recordkeeping is acceptable — could someone bring you an Excel file, for example?

Yes. Whatever works for the client. They could bring in yellow legal pads, Excel spreadsheets, Quicken or QuickBooks. But if you have multiple properties, I’ve not found anything better than QuickBooks for the money. It’s worked very well for real estate, because built into QuickBooks is this listing thing called classes.

If you name rental houses under classes, you can run a report that shows profit and loss by class — so what you’re getting is profit and loss by house. You assign every deposit and every check to a class.

How can new investors streamline recordkeeping?

Get organized quick. That means setting up paper files for each property. And you’ve got to be prepared to present the closing statement for any purchase, any sale or any refinance.

Those need to be available at the end of the year. And some type of books that summarizes the income and the expenses.  A BIT OF LIGHT READING: If you want to peruse the 1,000+ pages of the new tax bill yourself, visit bit.ly/k1802taxbill

Copyright MMXVIII 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 Photos

???

photo by bruce w. hinson www.obedientcamera.com Joe Burnett Sr., Rue McFarland and Layne Smith met up to talk some real estate at January’s main meeting on wholesaling and marketing.

3.43 inches wide by 4.26 inches tall photo by bruce w. hinson www.obedientcamera.com Wholesaler Sharon Vornholt wielded the clicker at last month’s main meeting, where she shared her favorite lead channels for marketing to motivated sellers.

photo by bruce w. hinson www.obedientcamera.com

photo by bruce w. hinson www.obedientcamera.com

Frank Miller walked us through Woodhaven’s bar is a popular place to netsome profitable wholesaling work, order refreshments, and be mesmercase studies. ized by that bubbling water display.

photo by bruce w. hinson www.obedientcamera.com Hampton Scurlock joined his fellow wholesaling panelists at a 5-hour workshop, where they shared more tips on how they pull down lucrative assignment fees — for $5,000, $10,000, $20,000 and more. (Photo by Lauren Willoughby)

KREIA kicked off 2018 with a packed house: About 250 people showed up to learn about wholesaling and marketing from our panel of experts.

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

Copyright MMXVIII 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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South End L.O.T.S. Home: A Closer Look Eric George rehabs home off National Turnpike

If January’s L.O.T.S. house looked a little familiar, it’s because it also served as the sample flip house for the rehabbing workshop KREIA held in 2017. Those of you who attended last year got to see the “before,” and everyone who came to L.O.T.S. a few weeks ago saw the “after.”

One Saturday last August, after having spent the morning in the classroom learning about how to estimate repairs, a group of investors followed KREIA President Eric George out into the field and on a tour of this house at 7500 Yorktown Road.

Their mission on that summer afternoon was to poke around the house, photo by bruce w. hinson inside and out, taking notes, and then www.obedientcamera.com estimate repair costs based on what they Host Eric George bought this bi-level house at 7500 Yorktown Road as a short sale. had learned earlier in class. Eric had his estimate, of course, but he didn’t share it until after students Along with posting his rehab numbers for other KREIA convened in the living room to discuss what they’d seen and members to examine, Eric also posted his scope of work. what they thought needed to be replaced or repaired — and Here’s what he and his crew did in rehabbing this house: had called out what they decided it would all cost.

They replaced all the flooring, putting down hand-scraped At the time of the workshop, Eric had a contract on the laminate and, in the bedrooms, carpet. They painted the house, and his offer was under negotiation. He’d found the house throughout, added new trim work, and replaced all the house by marketing to probate leads, mailing executors of lights, fans, outlets and switches. After they discovered that estates of people who had died. The homeowner had passed the electrical system was aluminum, replacing the outlets and away owing about $117,000 on the house, Eric said, more switches to match was a safety must. than it had then been worth. “We had to do a short sale.”

“All the windows are new. The roof is new. The water heatEric offered $85,000, and er is new. We serviced the air conditioner and the furnace.”

Agency Title negotiated the In the kitchen, they added new countertops and new applishort sale on his behalf. “They ances. They kept the beautiful cabinets but replaced the hardbasically do the negotiation for ware. “I thought about painting them, but I’m glad I didn’t.” free as long as you close with Eric’s wife, Christina, said she heard other KREIA members them,” he said. “It went really approve his choice to keep the cabinets in their original state. smooth. That was the fastest Eric said gutting the bathroom hadn’t been his intent. “I had short sale that I’ve done — 10 planned on replacing the bathtub and the tile around it, but I weeks start to finish.” was going to leave pretty much everything else.” Once they The bank countered at removed the tile, though, they realized it was up on drywall. $93,000, and Eric accepted, “And when we took the tub out, we cracked some of the though the higher price meant tile on the floor. The floor tile was also on top of the subfloor, some items on his to-do list with no cement board underneath it.” So he gutted it, and would have to go. “If I had got now the bathroom has a new tub, tiled wall, tiled floor, vanity, it at $85,000, I would’ve put in mirrors, lights and toilet — “the whole nine yards.” photo by bruce w. hinson new vinyl siding and done a Eric also ended up redoing most of the plumbing. “There obedientcamera.com couple of other things to make were a couple of leaks that we couldn’t have seen until we got Eric found the house by mar- it just a little bit nicer,” he said, into it.” And he completely remodeled the downstairs bath. keting to probate leads from “but I think it turned out pretty The back yard required extensive landscaping. “In the suma local government website. well.” (continued on the next page) Copyright MMXVIII 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.

13

mer, you couldn’t even see the pool if you were standing at the back of the house,” he said. “So I had that trimmed up.”

“The only real drawback in the house is the pool situation back here,” Eric said. The pool’s liner sprang a leak and needs a replacement — as does the stolen water pump. He said he’ll write it into the listing that he’ll remove the pool and surrounding deck if the new owners want it gone, or offer them a concession on repairs if they want to keep it.

One definite plus to the house, besides Eric’s handsome makeover, is the detached two-car garage with skylights and electricity. It’ll make a nice workshop for somebody.

Each L.O.T.S. event is a mini-rehabbing workshop in itself.

You learn so much by being able to walk through another investor’s project for an hour, being able to ask questions and touch and see everything for yourself. If you like the L.O.T.S. experience and want more, make plans to attend the next full-day rehabbing workshop KREIA is holding later this year.

Like last year’s, it’ll be an in-depth tutorial on how to flip a house — from sourcing leads, to estimating repairs, to creating a scope of work, to hiring contractors, to best practices — from local folks like Eric who are doing lucrative rehab projects right here in Louisville, and have been for years.

So how close did last year’s rehabbing workshop students come to the final rehab costs? Some of them hit Eric’s budget practically on the nose. Well done, guys!

photoby bybruce brucew. w.hinson hinson photo www.obedientcamera.com www.obedientcamera.com After host Eric George described the home’s rehab, KREIA members congregated in the living room to network and ask follow-up questions.

The final tally? “I have about 35 grand in it,” Eric said.

After three days on the market, Eric’s house went under contract to a buyer who offered full price, $169,900, and it’s now in the inspections phase. Great outcome!

THE NUMBERS Purchase Price: $93,000 Estimated Repairs: $35,000 Holding Costs: $1,380 Financing Costs: $3,410 Closing/Commission: $7,000

Potential Concessions: $3,000 Total Expenses: $49,790 Sales Price: $169,900 Estimated Profit: $27,110

Why do we call it “L.O.T.S.”? Because we Learn On The Site!

Copyright MMXVIII 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 MMXVIII 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 Make Tax Time a Breeze!

By Mike Butler Books... your books... Are you 100% confident in your numbers? Are you 100% confident in your books or do you simply rely on your bank to do your books for you, especially with the new-fangled technology today allowing you to download all of your transactions?

YOUR BOOKS – do you understand your books and reports completely? Or do you have a bookkeeper or accountant who does it all for you and gives you a monthly report of some sort? If so, do you really understand 100% what these reports mean?

Are you capturing every red cent you spend in your real estate business? From those quarters out of your pocket into a parking meter? Bridge tolls? Business lunches, suppers and coffees? KREIA membership dues, registration fees to attend training events? (Education expenses for your business) Back in the ’90s, Jay Long and myself would attend an investor conference every January in Florida. One time, a superstar mega-millionaire local investor picked us up at the airport and took us to lunch. He then invited me and Jay to his penthouse condo overlooking the Gulf to get me to help him set up his computer and printer.

When Jay and I entered his condo, his huge great room, with glass from floor to ceiling for the view, was chock full of all kinds of papers scattered across the ceramic tile floor. Of course, I had to ask. He proceeded to tell me he saves all of his receipts from last year and he takes two weeks every January to get ready for tax time. Each ceramic tile represented a property, and he would divvy up the receipts by property. Over 100 properties... made me cringe. Yes, this is extreme, but it definitely worked. The bad side to this, especially if you are getting started, is there is no way to see how your business is doing every month. No cash-flow reports while running your business during the year. Today, this old pro is on top of everything!

Fast forward to today. Odds are, you are paying your bills and making your bank deposits. Just imagine doing it faster, easier AND having your books done behind the scenes at the same time using QuickBooks PRO®!

The system I’m talking about allows you to see your cash flow report by month, year, last year, and more, PLUS you get to push a button to see your rehab report to track in real time how much you‘ve spent so far on each rehab.

Tax time reports are already set up for you. Remember, this system does your books behind the scenes as you pay bills and enter bank deposits. Your reports are already created for you through the year 2030. Tax time summary reports by year – profit and loss and balance sheet for you and your CPA at tax time.

Here is what your CPA wants from you at tax time for the year involved: • Real estate purchased – with HUD 1 settlement statements • Real estate sold – with HUD 1 settlement statements • Money loaned to other investors and/or purchases of discounted notes • Capitalized expenses and improvements with receipts/invoices • If you are already paying bills and making bank deposits, this system does your books behind the scenes automatically. In fact, it’s the only complete system for real estate using QuickBooks Pro®.

Here’s a short six-step checklist to make sure you are ready for tax time: 1. Principal paydowns on money you have borrowed 2. Property taxes and insurance – make sure they have been paid on all properties and carefully review any lender-held reserves (escrow accounts) to pay your property taxes and insurance.

3. Properties purchased and sold – make sure you have entered the HUD 1 settlement statement properly for each property purchased and sold. Remember to zero out any properties sold in your chart of accounts. (You cannot sell it and still own it.)

4. Capitalized expenses – zero them out using the Post Office method of accounting.

5. Carefully review your tax time reports for last year.

6. Print two copies of your profit and loss report and your balance sheet report. Schedule a meeting with your CPA to review these two reports. They will find errors. Take great notes and go home and make the corrections. Then email your books to your CPA to do your tax returns.

KREIA members get a discount on the only complete system for real estate investors using QuickBooks Pro®. Get all of the details and more at www.InvestorBooksPro.com.

Please send me an email at Mike@MikeButler.com to get your KREIA member 50% discount.

P. S. Make sure you attend CPA Mike Grinnan‘s tax update for investors at this month’s main meeting.

Copyright MMXVIII 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 MMXVIII 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 MMXVIII 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 MMXVIII 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 MMXVIII 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 Membership Committee Update

By Rick Littrell We had the first meeting of the Membership Committee on 1/19/18. We had a good turnout and got to know each other better. We made sub-committee assignments and discussed goals for the year. We created 5 sub-committees: • Seasoned Investor Development • Promotional Products & Retail eCommerce • KREIA Member Development • Event Membership Desk • KREIA Welcome Kit & Development Additionally, we distributed our first survey to identify seasoned investors at the January meeting. We have reviewed your responses and decided to redesign the survey and pass it out at the February meeting. All attendees will be asked to complete it, regardless of experience level. We’re trying to find out what you want.

The Promotional Products & eCommerce sub-committee reviewed product suggestions to use for a KREIA ecommerce site (partnering with Vistaprint). The requirements for the new products are being reviewed, and we are going to focus on these product categories: • Business (to include business cards, pens, presentation folders, etc.)

• Gifts (to include both individual customer and corporate) • Apparel (to include shirts, sweatshirts, jackets, etc.)

GOVERNMENT AFFAIRS REPORT Kentucky Realtors Legislative Update February 12, 2018 “As we sprint towards the halfway point of the 2018 session, Kentucky REALTORS® is busy tracking several important issues, but there are still several large matters still looming in the legislature. The General Assembly must constitutionally pass a two-year budget, and promises have been made to reform the state’s troubled pension system.

While those issues continue to develop, the Legislative Quick Response Team is watching bills related to property deeds, assistance animals, and planning and zoning enforcement appeals.”

 Read weekly updates on bills in play in Frankfort at Kentucky Realtors’ site: bit.ly/kyr_lu

• Promotional (magnets, signs, window decals, etc.)

• Marketing materials All products will be branded or co-branded KREIA. We are actively looking for more volunteers for these subcommittees. For more information, contact Rick Littrell at 502-694-0557.

Thanks for your continued support.

Copyright MMXVIII 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 MMXVIII 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 MMXVIII 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

THE Local Resource for Landlords, Rehabbers & Wholesalers Meeting the 4th Thursday of every month (except November & December) at Woodhaven Country Club, 7200 Woodhaven Road, Louisville, KY 40291 KREIA.COM • twitter.com/reiaky • instagram.com/reiaky • youtube.com/KreiaDotCom facebook.com/reiaky (public) • facebook.com/groups/kreiaky (private)

UPCOMING EVENTS

Tax Tips for Real Estate Investors CPA Mike Grinnan addresses the burning question: How does President Trump’s new tax plan affect us? Thursday, Feb. 22.  Early Meeting: Bruce Hinson on taking great photographs  February 27 — noon-1 p.m. L.O.T.S. event. Location TBD. Check your email. Members only. Lunch is provided.  March 6 — 11:30-1 p.m. Louisville Lunch and Learn.

Location TBD. Members only: Check the private Facebook group. You buy your own lunch. Ed Gibson is the organizer.  March 14 — 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.

You buy your own lunch. Brian Haeseley chairs.

 March 15 — 6 p.m.-7:30 p.m. KREIA Game Night: CashFlow 101. Want to get out of the Rat Race? Play CashFLow with other investors pursuing financial freedom and you'll find out!

Meetups are planned for the third Thursday every month at the offices of SurePoint Equity.

Making Income With Rental Properties "KREIA advertising

Learn best practices for managing tenants, and get tips on is by far, hands down, the increasing cash flow. Scheduledabsolute to be on the panel are Mike best advertising Butler, Erik Hitzelberger and Clay Smith. guys are dollar These ever spent forthree of the highest-powered landlords and property managers Borders & Borders!" in the area. Thursday, March 22. Workshop to follow.

Harry Borders Attorney Borders & Borders, PLC

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