October 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 10-18 October 2018 President’s Letter

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KREIA Members!

Paid Advertising Rates

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Short-Term Rentals: All about Airbnb – local hosts tell all!

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Welcome, New Members!

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Q&A: Jonathan Klunk shares tips about Airbnb

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This month I’m really excited about our monthly meeting on shortterm rentals, as the Airbnb market has exploded around Kentucky and Southern Indiana over the last few years and many investors are making a killing off each one! It’s not all roses, however, and you have to do it right or you can get yourself in hot water quickly.

Eric George With all the fuss lately from HOAs and different neighborhoods wanting to ban these kinds of rentals, this will be an info-packed meeting you don’t want to miss!

Mike Butler: Property Manager Do’s & Don’ts

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Jennifer Fields & Brad Lammi: Attorneys warn of consequences of bid-rigging at auctions

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Holiday Party Preview: News on 8 next month’s celebration, plus a call for photos & remembrances

We’ve invited local short-term rental gurus Jonathan Klunk, Jay Bowman, Cliff Hayden, Wayne Gallavin and Zach Leonardo to teach us all the do’s and don’ts and answer all your questions on this fast-growing niche!

I also want to remind you to pick up your copy of the new KREIA Member Directory at this month’s meeting! We’ve added a ton of great info and resources to the directory that you’re going to love, so grab your copy by the Help Desk after you check in this month!

KREIA Photos

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Lastly, our 40th Anniversary KREIA Holiday Party is scheduled for November 15th at Woodhaven Country Club, so mark your calendars now and plan to bring a friend or two for an extra fun evening of entertainment and networking!

L.O.T.S. Recap: Frank Miller shoots for $41K in floodplain

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See you at the meeting!

Frank Miller: Mastermind event 18 will be an investing crash course

Eric George KREIA President

John Archer: IT guy debuts tech 22 column with tips on backups KREIA Member Directory: How 22 to get yours, plus corrections Nina Musgrave: Infographic on Louisville Airbnb stats

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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.

Your KREIA Leaders

President Eric George

Vice President Tamara West

Advertise With KREIA

Secretary Erik Hitzelberger

Treasurer Mike Treasurer-Elect 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 advertising levels to get your ad in every issue of KREIA's newsletter and be invited to make ad pitches at meetings:

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

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

Rue McFarland

George Foree

Dennis Erhard

John Jones

Lauren Willoughby

Darin O'Neil

Mike Fallot

Hampton Scurlock

Mike Butler

Chris McCarty

Greg Nalley

Clay Smith

Parliamen- Past Pres. tarian Michelle Frank Rawn Miller

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 to educate you 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 advertising levels and pricing are in effect for new member signups and upon renewal for current advertisers.

Questions? Send email to News@KREIA.com or catch up with KREIA Sponsor/Advertiser 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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Airbnb and the Short-Term Rentals Explosion How do short-term rentals compare to traditional? We’ll be asking local hosts Imagine if you had tenant turnovers a couple of times a week instead of every couple of years. What in the world would inspire landlords to put themselves in that position?

Hmmm … money. Lots and lots of money.

Short-term rentals are taking off. Companies like Airbnb, VRBO and HomeAway are turning average homeowners into entrepreneurs who rent out their houses for big bucks.

Some even buy or lease additional houses for the purpose of renting them out to travelers for a few days or a few weeks at a time.

Louisville Airbnb hosts earned about $10 million in 2017, according to a Courier-Journal article. As of a few days ago, 416 short-term rentals are officially registered with the city.

(Many under-the-radar hosts have skipped the red tape, but they may not be able to keep getting away with it for long as new regulation kicks in.)

Here in Louisville, traditional landlords have tried dipping their toes in the short-term rental market and have found it inviting indeed. And not just at Derby time! We’ve asked a few of them to tell us about their experiences and offer tips this month at our main meeting.

Be in your seat at Woodhaven by 7 p.m. on Oct. 25th to hear what KREIA members Cliff Hayden and Jay Bowman have to say.

KREIA alum Wayne Gallavin will be here too – or his business partner will (we’re still working out details on the final guest list). Those who attended a Lunch & Learn event a few months ago where Wayne spoke got to hear about a reverse 1031 exchange strategy he’s using to convert traditional West-End rental houses into high-end Cherokee Park short-term rentals.

We’ve also invited a couple of visitors, Jonathan Klunk and Zach Leonardo. Klunk runs Key Source Properties (keysourceproperties.com), a Louisville company that manages short-term rentals and also offers a la carte services for Airbnb hosts. Leonardo runs a website where you can list short-term rentals for free.

OK, handling multiple frequent tenant turnovers in shortterm rentals really is nothing like handling turnovers after long-term tenants have been holed up in your property.

There won’t be big repairs to make (we hope!), but there will need to be a lot more attention paid to things like replenishing sheets, towels, paper products and other

supplies. Yes, you have to furnish the place too and clean after every “turnover.” And, yes, you need to be available to answer questions from your guests.

Managing short-term rentals is a lot more hands-on than being a traditional landlord, but you may be amazed at how much can be automated and outsourced.

Is now the right time to get into Airbnb? Increasing regulation and permitting rules probably mean it’ll only become more difficult to enter this niche in the future.

RESOURCES  Local Rules & Regulation. When you visit this city govern-

ment website, you’ll find links to register for a permit and see do’s & don’ts, zoning info, lists of neighborhoods where shortterm rentals are not allowed, and more. Head over to https://louisvilleky.gov/government/planning-design/shortterm-rental-information  Airbnb.com. Do some browsing here to snoop on your competition. Read their listings, look at their photos, and see what amenities they offer. If you check out their nightly rates and booking schedule, you can estimate their earnings.  Local Facebook groups. Ask for permission to join “Louisville Airbnb Hosts” and “Great Neighbors Airbnb Louisville Hosts and Fans” to communicate with other area Airbnb hosts.  Courier-Journal column. Go to courier-journal.com, search for Airbnb, and you’ll pull up columns by Dana McMahan, a local Airbnb superhost who offers advice to other hosts. She also does consulting at soyouwannabeanairbnbsuperhost.com  More on Airbnb: Turn the page for a Q&A with Jonathan Klunk. Turn to Page 24 for Nina Musgrave’s infographic on Louisville Airbnb stats.

5:30 p.m. Early Meeting: Mike Fallot 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!

MM Lending’s Mike Fallot will address “Working with your Private Lender in the New Real Estate Market.”

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!

Kevin Allen Eric Armstrong Karl Bergklint Thomas Carter Paul Cobb Dalton Johnson Tyler Lamb Jack Mcginness

Dariel Mejias Bermudez Emmanuel Nidhiry Jill Schmidt Danny Smith Camille Wells Natalya Whitaker

Q&A With Jonathan Klunk The president of Key Source Properties, a local shortterm rental management company, answers our questions about Airbnb and short-term rentals.

What is the average occupancy rate in Louisville for Airbnbs?

65 to 70 percent 12-month average for year-round short-term rentals. Historic data has 56% city-wide, but that takes into consideration people who advertise their property for single events.

What kind of cut does Airbnb take?

Each platform is different, but Airbnb takes only 3% from hosts to cover credit card processing. The majority of their fees are charged to the guest. Airbnb also collects and remits occupancy tax to the city and sales and transient taxes to the state. Those amounts are charged to the guest, above and beyond the nightly accommodation and cleaning cost.

How does the amount of money a short-term rental host takes in compare to the rent a traditional landlord receives?

On average gross rental receipts are double, but shortterm rentals also have higher expenses. If it’s done right, it could be three to four times higher. If you don’t do it right, then you may be doing a lot of work for the same amount of money, or less. For investors to enter the short-term rental market they have to be ready to be in the hospitality business. It’s no longer just rent collection and repairs.

Do you think Louisville is at the saturation point for short-term rentals?

As more people are adopting short-term rentals for travel to our city, the market is constantly growing. However, the number of hosted properties is growing as well.

Many seasoned hosts are seeing year-over-year revenue declines due to this growth, but many are exceeding market expectations. In my opinion, we are about 12-24 months away from being saturated. At that point, the cream will rise to the top, and others will have tough decisions to make. Corporate rental accommodations (30-day+ furnished rentals) are also showing significant growth and serve as a great way to supplement income during slower months.

What does your company charge to manage short-term rentals?

Key Source Properties charges 20% of the nightly accommodations, plus the guest-paid cleaning fee. We’re selective about who we bring on as clients to make sure we are a good fit. That goes for properties as well. We provide Continued on Page 18

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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Property Manager Do’s & Don’ts

 Before You Hire a Property Manager.  So You Want to Be a Property Manager

By Mike Butler First off, if you have read my book “Landlording On AutoPilot,” you will recall when dealing with your great residents, you always identify yourself as “the person who works for the property manager.” This is a communication and business strategy. It has absolutely NOTHING to do with the legal requirements and issues.

Now, let’s get into the LEGAL Do’s and Don’ts involving managing real property for other owners for a fee.

In Kentucky and in most states, Only A Licensed Real Estate Broker Can Manage Properties For Others For A Fee. PERIOD. NO EXCEPTIONS. Violating this law in Kentucky is a CRIME.  The first offense is a Class A misdemeanor.  The second and subsequent offenses are a Class D FELONY. KRS 324.990 Engaging In Real Estate Brokerage Without License – Penalties (1) Any person engaging in real estate brokerage without a license shall be guilty of a Class A misdemeanor for the first offense and a Class D felony for any subsequent offenses. A person who engages in real estate brokerage without a license due to a failure to renew a previously valid Kentucky license shall not be subject to this penalty if the person is entitled to and does avail himself of the remedial provisions of KRS 324.090(3).

(2) In addition to the penalties set out in this chapter, a Circuit Court may impose an additional penalty on any person who violates any provision of this chapter by fining them not less than one hundred dollars ($100) nor more than one thousand ($1,000) or imprisoning them for a term not to exceed six (6) months, or both. Upon conviction, in addition to the aforesaid fine, there shall be added to the fine the amount of any real estate brokerage commission paid or received as a result of the violation or violations in question. Each transaction shall be regarded as a separate offense and shall be punished as such.

324.010 Definitions For Chapter—Application of chapter As used in this chapter, unless the context requires otherwise: (1) "Real Estate Brokerage" means a single, multiple, or continuing act of dealing in time shares or options, selling or offering for sale, buying or offering to buy, negotiating the purchase, sale, or exchange of real estate, engaging in property management, leasing or offering to lease, renting or offering for rent, or referring or offering to refer for the purpose of securing prospects, any real estate or the improvements thereon for others for a fee, compensation, or other valuable consideration;

(9) "Property Management" means the overall management of real property for others for a fee, compensation, or other valuable consideration, and may include the marketing of property, the leasing of property, collecting rental payments on the property, payment of notes, mortgages, and other debts on the property, coordinating maintenance for the property, remitting funds and accounting statements to the owner, and other activities that the commission may determine by administrative regulation; To Protect Yourself, ALWAYS Ask “Who is the Licensed Broker” of Your Property Management Company? ALWAYS go online to http://oop.ky.gov/lic_search.aspx to verify this person is in fact a licensed broker.

If you have already screwed up and hired someone who is NOT licensed to manage your properties for a fee, please contact a real estate investor expert attorney to guide you on how to terminate your written agreement properly and safely.

If you have hired one of these knuckle-heads, they are representing you. Therefore, anything that comes out of their mouth, print, email, flyers, brochures, websites, is the same thing as coming directly from you! Don’t forget all of the Fair Housing Laws.

Kentucky’s Licensing Laws has a boatload of requirements to “practice real estate” as a broker.

TIP: Do Not Shop Property Managers based solely on their management fees. Many offer super-low management fees to get you in the door. Once on board, you will get blasted with fees out the wah-zoo! For best results, do your homework and hire a property management company with plenty of happy and satisfied clients. Remember, when you pay peanuts, you get monkeys.

As an Investor, you should always factor in your training and education just like factoring in insurance and property taxes on the budget for your real estate business. If you are serious about Building Your Wealth with Real Estate, go ahead and enroll in one of the schools to get your real estate license.

You will drop your jaw at all of the things you will discover about real estate that you never knew existed. Ignorance of the laws is not an excuse or get out-of-jail-free card.

But Wait, There’s More!...

On top of all of this, you MUST Always be in compliance with HUD’s and Local Fair Housing Laws. You can get free online Fair Housing Training at MikeButler.com (a 19-minute video). FYI, California has 17 protected classes in their Fair Housing Laws.

Continued on Page 24

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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Bidder Beware!

Don’t violate federal anti-trust laws in public foreclosure auctions

By Jennifer Fields and Brad Lammi As the real estate market continues to heat up, investors frequently begin looking at novel opportunities to purchase investment properties. At some point, an investor might explore purchasing properties at the commissioner or foreclosure auctions.

Commissioner’s sales have many nuances that an investor would be wise to understand. But while many of those nuances are important, none is as important as understanding that there are some activities which, if you engage in them during the course of purchasing a foreclosed property, could land you in jail.

Any attempt to collaborate with another business or individual for the purpose of restraining trade is a violation of the Sherman Act. The Sherman Act, also called the AntiTrust Act, is a federal law with both civil and criminal penalties. In recent years, public foreclosure auctions have been the targets of criminal Sherman Act investigations brought by the Department of Justice. In the past six months alone, there have been several indictments and/or guilty pleas or convictions under the Sherman Act: • August 9, 2018: West Palm Beach Florida, an investor pleaded guilty to bid rigging at public online foreclosure auctions; • June 20, 2018: Palm Beach, Florida , an investor pleads guilty to bid rigging at online public foreclosure auctions; • July 19, 2018: Mississippi, the seventh investor pled guilty in public foreclosure auctions (not online); • May 9, 2018: California , five investors were sentenced to a collective total of 29 months of prison, 192 months of probation and $6,405,755 in fines and $284,000 in restitution for their role in bid rigging in public foreclosure auctions.

The indictments include the following activities alleged to violate the Sherman Act: • Agreeing not to compete or to stop competing to purchase selected properties at public foreclosure sales; • Designating which bidders would win selected properties at public foreclosure sales; • Agreeing on when to refrain from or stop bidding for selected properties; • Purchasing selected properties at artificially suppressed prices.

By way of example, let’s say that Brad and I go to the commissioner’s sale. We are both bidding on the same

property. At some point, I indicate to Brad to stop bidding with an understanding that after the sale, he and I will work out some way to determine who will be the actual purchaser of the property. Some methods might include a separate private auction or maybe even just flipping a coin. These actions show a conspiracy to artificially lower the ultimate sales price, which is a violation of anti-trust laws.

All of the above actions are violations of federal law and carry civil penalties and potential criminal charges. Investors must be careful to act independently and not to collude with other investors in any way that would unreasonably restrain trade or drive down a price on a property sold at a commissioner’s sale.

Feel free to contact either of us if you have any questions about what constitutes a violation of the Sherman Act. Contact Jennifer Fields at 502-894-9200 and Brad Lammi at 502-893-4494.

Holiday Party Preview We’re closing out another year of investing, and now it’s time to kick back and have fun! Party Man Frank Miller is still ironing out the details of our year-end celebration, to be held November 15th at Woodhaven, but he tells us that we can look forward to:  Food!  Prizes! We’re going to be raffling off two large-screen TVs.  Entertainment! Prepare to be astonished by magician and mentalist Ronn Winter.

Have we said free yet? Yes, the event will be free to active KREIA members. The door fee for guests is the usual $30.

And … It’s KREIA’s 40th Anniversary!

Time flies when you’re having fun and making money! We want to celebrate our longtime members, and we need your help. Do you have photos from KREIA main meetings and events back in the day? Of KREIA members? We’d love to see them, and we promise not to make fun of their hair.

If you have photos or remembrances to share – if you want to type up a note on what KREIA has meant to you over the years – please visit our form at http://bit.ly/kreia40th, or send email to kreia.updates@gmail.com We plan to add your contributions next month to our slideshow and the newsletter.

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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Do You Want Your Business Card to Appear Here? Join as a Business Card Member for only $199/year, and see your ad in a year's worth of KREIA newsletter issues!

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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photo by bruce w. hinson www.obedientcamera.com At September’s “Meet the Candidates” event, Rue McFarland introduced local politicians: Angela Leet, who’s running for mayor; John May, who’s running for PVA; Bobbie Holsclaw, current Jefferson Co. Clerk; and Jennifer Alexander, who’s running for Metro Council .

photo by bruce w. hinson www.obedientcamera.com

photo by bruce w. hinson www.obedientcamera.com Bobbie Holsclaw’s turn at the microphone earned her cheers and applause from the KREIA members in the crowd.

KREIA

Photos

Mayoral candidate Angela Leet stayed to answer questions from KREIA members and guests after the presentation was over.

See more photos 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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Edgewood L.O.T.S. Homes: A Closer Look Frank Miller braves floodplain, shoots for $41,000 profit

“Who would like to take $80,000 and turn it into a $40,000 profit?”

Frank Miller asked the crowd, kicking off his presentation at the October 2nd L.O.T.S. event.

Investors gathered nearby gave a reasonably enthusiastic “Woo!” For a house that’s both small and in the floodplain, a $40K rehab profit is worth a “woo” or two.

The house at 2810 Whitlock is in the Edgewood neighborhood, which is bordered by I-65 to the west, Fern Valley Road to the south, and Preston Highway to the east. “We’re in the very back of this neighborhood,” Frank said, “and right behind you is a “Most of the houses that we do are not usually this small,” Frank Miller said of the threehumongous ditch.” bedroom, one-bath house, which occupies 975 square feet. (Photos by Lauren Willoughby) When you view the area on a map, buyer is looking for. So they can still afford the flood you’ll see the house backs up to a waterway called “Greasy Ditch,” with Fern Valley Road businesses lining the other side. insurance. For this one here, it’ll be about $800/year for But this section of the neighborhood has neatly kept homes, whoever buys it.”

As for comping a house in the floodplain, Frank said he with sidewalks, and looks like a good area to rehab a house. usually takes off somewhere between $2,000 to $4,000.

Still, it’s hard to get past the floodplain angle, and that was “The reason why I get these houses so cheap is because the topic of most questions lobbed at Frank.

Does it take longer to sell houses in a floodplain? How does most people are afraid of floodplains,” he said. “Make sure it factor into his decision to purchase? How does he adjust his you do your research, do your numbers, do your comps, but do not be afraid of the floodplain if you’re in a cheap comps to account for it? How much will the end buyer have neighborhood.” to pay in flood insurance?

Frank picked up the house, a bank foreclosure, back in Frank said the deciding factor for him is if the house sits March at the Commissioner’s Sale for $57,670. above or below a sale price of $150,000. Above that, target buyers tend to shy away “We’ve got usually about 14 to 15 houses under from it, and it will construction at a time, so sometimes it takes me a little probably take longer to while to get to each deal,” he said, explaining why he hasn’t sell. finished the rehab yet.

“Anything under His crew started the rehab by cleaning out the house: $150,000, I’m usually Labor and dumpster cost $450. Flooring cost $1,850. He had good with it,” Frank drywall work done ($855) and had the whole of the interior said. “In this particular painted ($1,650). He added new interior doors. Ceramic tile case, we’re going to be went into the bathroom and a tiled backsplash in the at $126,000, and it kitchen. He called in electricians and plumbers and had the should take us only HVAC serviced. three to five days to sell Frank advised networking and said he used some KREIA because of the price advertisers for this rehab. Benthall Brothers replaced all the point. It’s a brick house windows in the house for $1,500. with a two-car garage,” Express Cabinet Store supplied the cabinets. “I use the he added, “and that’s same cabinets over and over again. When someone calls in what a first-time home Continued on Page 24 L.O.T.S. host Frank Miller 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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Mastermind Event Will Be an Investing Crash Course Real estate is booming in our local market!

By Frank Miller By now if you did not know, the real estate market is booming here in Louisville, and local investors are cashing in! Even as you read this, area investors are out there right now flipping and wholesaling properties and making huge profits.

Out-of-town investors are putting their money to work here too. Investors from New York and California are coming to Louisville to buy package deals on single-family homes for rentals as investments, as well as apartment complexes, and they are happy with as little as 5% returns.

If you have ever thought about supplementing your income, or skyrocketing your income, now is the time to do so by jumping into the real estate investing world.

Would you like to learn more about how you can cash in using your home-field advantage? You need to attend our upcoming mastermind on Oct. 29 at the Omni Hotel in downtown Louisville, from 7 to 8:30 p.m.

“Crush It: Fixing & Flipping and Wholesaling Houses Like the HGTV Pros” is a must-attend event! I will be teaching about how to fix and flip houses. I’ve been doing this for 14 years on a daily basis and have completed hundreds of deals. Now I’m teaching and mentoring others on how to do it too through my training company Believe Investment Group.

Don’t have a lot of cash on hand right now? We’ll also show you how you can invest in real estate with “No Money Down!”

And I’ve invited special guest speaker David Lecko, creator of the DealMachine App, which helps automate marketing when you’re driving for dollars. He’ll show you how you can wholesale properties even if you hold down a full-time job!

We will also have vendors in the room that local pros use, and you can meet and network with them.

Pre-registration is encouraged to make sure you have a seat. Limited seating is available, so register online at Bigrealestateevents.com.

The event will cost you $59 dollars at the door, but only $29 if you sign up online for this action-packed event!

WHAT: “Crush It: Fixing & Flipping and Wholesaling Like the HGTV Pros” WHEN: Monday, October 29, 7 p.m. – 8:30 p.m.

WHERE: Omni Hotel. 400 S. 2nd St., Louisville, KY 40202 HOW MUCH: $59 at the door; $29 if you register online

Frank Miller and Believe Investment Group

David Lecko and his DealMachine app Q&A With Jonathan Klunk Continued from Page 4 full management as well as consulting services, to help new hosts get started. We also provide ancillary services, such as cleaning and linens, for those who choose to self-manage.

Do you have any tips for new short-term rental hosts?

Once you make the decision to do it, just do it. It’s trial and error. Don’t be afraid to make mistakes.

Second, understand zoning very well before you get started – what’s allowed and what’s not allowed. I cannot stress this enough: Zoning is the single most important piece to shortterm rentals in Louisville. Understand zoning first, then the neighborhood, the neighbors, the neighborhood associations, HOAs and deed restrictions. Every neighborhood is different, and every ZIP code is different.

Short-term rentals are not allowed in multifamily at all – single-family and duplex only. The city of J-town also has shortterm rental restrictions. Commercial properties have more flexibility. Residentially zoned condos must be owneroccupied. If an owner-occupant wants to rent out a residentially zoned condo, short-term rentals must be allowed via recorded board minutes.

If you have an occupied property in your possession, go through the permitting process while you have a long-term tenant. Plan to furnish and put your property on the shortterm rental market after you have the correct permits. Keep in mind that at any point the city can stop giving out new permits. And always, always, always get your permit before hosting any guests for less than 29 days.

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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TECH CORNER

Is Your Data Backed Up? Yes, No or Maybe?

By John Archer With cyber criminals having the capability to lock you out of your data permanently, you should really consider having a backup plan to do it correctly.

Your business data is the key to being successful in so many ways. Why risk losing it?

I have spent my 35 plus years in Information Technology (IT) managing and securing computers systems. I take the time to educate customers on the importance of not only having a known good data backup but having a minimum of TWO CURRENT BACKUPS. Why two? If one method fails, I still have a safety net or fallback plan.

“A reliable backup can make the difference between disaster or just a minor problem in your day.”

Consider seven questions to not only test your confidence that your backup is as good as you think it is, but to ask the right questions to know it is.

• Who did I put in charge of making sure the backup is current?

If it is an employee, is that person still working for me?

• What is actually being backed up?

Do you really know?

• When is the backup being done and how often?

Are you sure?

• Where is the on-site backup stored?

Seems like a stupid question but have you seen it lately?

• Do you rotate the 2 or more external devices on-site and off-site?

• If it is online, do I know what Username, Password, and in some cases what the security key is?

• Have you ever tried to restore a random file as a test?

It can be an eye-opening experience for many users.

Backup plans fail for many reasons. If you are doing an online backup only and the bill didn’t get paid when due, you could lose that backup copy. If the external device you are using fails, you will lose the backup copy. That’s why you need a local and an online backup.

Also, consider that If you have a local backup it’s much quicker to restore your data than streaming it back if you

have a lot of data to restore. One more thing, does your online backup alert you or someone responsible if it fails to do the backup?

There are many choices for backing up your data securely. I can be of assistance to help you choose the right one for your situation and get a great data backup program implemented right away.

I can be reached at (502) 648-1417 cell or email me at john@premiumpcs.com.

My Background: I have been an active IT service provider and consultant for over 35 years.

I was a multi-state IT service supervisor for Lanier Business Products until 1990. Working for Lanier, I serviced the Ky. Governor’s office, U.S. Attorney’s office, FBI, and various high-level agencies including computer systems at Fort Knox.

I then started Premium Computer Solutions and PCS in 1990, operating my computer service business in Hikes Point until 2015.

I was also the co-founder of RentalHouses.com, which started in Louisville in 2000 and grew to be one of the top rental house listing services in the country in 2007. It was sold in 2007 to Primedia.

How to Get Your Member Directory If you haven’t picked up your copy yet, please ask at the Help Desk on your way in to this month’s meeting.

CORRECTIONS  We’ve started hearing that some of the data in the Yellow Pages section is inaccurate. We harvested that information from members’ profiles and did not verify it, and it turns out there was some confusion on how to fill out profiles. We are revising our Yellow Pages procedures for the next edition.  In the credits section, we left out a very important contributor. Many apologies to Ed Gibson, who was a vital part of the Directory committee. Not only did he help kickstart the project, he rounded up new advertisers for us.

Thank you, Ed, for all that you do.

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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2 Bed 27%

Breakdown of Rental Size Airbnb Rentals: Louisville

Airbnb Stats Information from AirDNA.co • accessed 10/13/18 1,418 Active Airbnb Hosts (Louisville)

84%

Single-Listing Hosts

16% 25%

(by ZIP code)

Top 10 Most Expensive Airbnb Rentals: Louisville

0% ZIP 40245 40242 40299 40207 40223 40243 40222 40211 40218 40241

20% 40% 60% 80% 100% Avg. Price $ 300 $ 257 $ 225 $ 212 $ 206 $ 201 $ 195 $ 192 $ 175 $ 175

# Rentals 60 12 43 151 39 19 58 5 29 36

(by ZIP code)

Superhosts

Top 10 Most Active Airbnb Neighborhoods: Louisville

Multi-Listing Hosts

3 Bed 24%

1 Bed 23%

Studio 7%

ZIP 40204 40206 40205 40202 40207 40217 40203 40214 40208 40213

5+ Bed 6%

# Rentals 297 252 183 166 151 129 85 85 73 66

4 Bed 13%

Avg. Price $130 $129 $142 $133 $212 $130 $131 $128 $107 $152

Property Manager Do’s & Don’ts Continued from Page 6

Edgewood L.O.T.S. Home Continued from Page 15

AND, You MUST always be in compliance with your State and Local “Landlord Tenant Laws.”

You can grab your free copy online at MikeButler.com. If you are going to be in the real estate investing business, it would be very wise to read and have knowledge of the rules and laws involving you real estate business. Plus, keep a copy at your fingertips for easy reference. (Perhaps keep a copy on your smart phone.)

You can also grab a copy of Kentucky’s Licensing Laws regarding Property Managers online as well.

The main objective of Kentucky’s Real Estate Licensing Laws is for both consumer protection and, believe it or not, for the broker’s and sales associate’s (agents) protection.

they ask if they want the ‘Frank Miller Special.’ It’s always just the basic white with the soft-close doors. Those are always the most inexpensive, but they look good,” he said.

“Roughly we’ve got $17,879 in it in rehab,” Frank said, adding that all the prices he quoted included labor and materials. “The total invested in this deal is $81,869 all-in – carrying costs, closing costs, everything.”

Frank said the house was about two weeks away from being finished, staged and listed, and he projected profit at $41,306. “Now, ask me how much of my own money I have in this deal.”

“How much?” someone asked.

“Zero.”

Building Your Wealth with Real Estate!

www.MikeButler.com www.QuickBooksForInvestors.com

THE NUMBERS Purchase Price: $57,670 Utilities: $1,035 Carrying (7 months): $5,285 Labor & Materials: $17,879 TOTAL INVESTED: $81,869

Est. Sale Price: $126,900 Commissions: $2,520 Home Warranty: $450 Real Estate Taxes: $755 PROJECTED PROFIT: $41,306

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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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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First Class Mail U.S. Postage Paid Louisville, Ky Permit No.1498

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

Short-Term Rentals Is it time to jump into Airbnb? We invite a few local landlords who’ve made the leap to offer tips and tell us about their experiences.

Thursday, Oct. 25, 5:30 p.m.  Early Meeting: Mike Fallot of MM Lending will talk about private lending in today’s market.

 November 14 — 11:45 a.m.-1:30 p.m. KREIA Indiana SubGroup Luncheon Meeting. Meets the 2nd Wednesday each month at Tucker’s Restaurant in New Albany at State Street and I-265. You buy your own lunch. Brian Haeseley chairs.

Holiday Party

It’s time to celebrate! There will be food, prizes and entertain October 30 — noon-1 p.m. L.O.T.S. event. Last Learning On ment at our year-ender! You can the Site event of the year. Check your email. Lunch is provided. look forward to being amazed by Ronn Winter, magician and  October 31 — 8 a.m.-10 a.m. Construction Seminar. KREIA Past President Mark Lechner invites us to event he is keynoting. mentalist. It’s free for active  November 1 — 5 p.m.-7 p.m. KREIA Happy Hour. Network- KREIA members!

Thursday, Nov. 15, 5:30 p.m. ing at a local restaurant. Check your email. Members only.

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